Mortgage applications shot up last week, reversing a slip, as rates remain stable into February.
The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – increased by 3.7%, countering the week prior’s 7.2% dip.
Adjusted purchase applications slipped by 1%, while the unadjusted index increased by 6% and was 19% lower YOY.
Rates actually rose slightly, clocking in at 6.8%, but have stayed in the mid-6% range since the beginning of 2024.
“Mortgage rates have stayed close to where they started the year, despite swings in Treasury yields because of slowing inflation offset by stronger than expected readings on the job market,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
“Rates at these levels have not prompted much of a reaction in the refinance market, as most homeowners have mortgages with much lower rates. Purchase activity has been strong to start 2024 compared to the final quarter of 2023. However, activity is still weaker than a year ago because of low housing supply.”
Refinances have seen a little boost, though– they’re up by 12% and account for 35.4% of total applications, an increase. In the past decade, they averaged 58% of all activity.
Activity across the board is expected to increase as the year progresses, and consumers are starting to see the bigger picture. In Fannie Mae’s latest Home Purchase Sentiment Index, a survey-high number of consumers said they believe mortgage rates will decline in the next twelve months.
Buyer confidence remains constrained by soaring home prices, however.
“All in all, while a lower mortgage rate path supports our forecast for a gradual increase in housing demand and sales activity in 2024, until we see a meaningful increase in housing supply, we expect affordability will remain a significant barrier to homeownership for many households,” Doug Duncan, Fannie Mae Senior Vice President and Chief Economist, noted.
ARMs, meanwhile, fell to 6.4% of all applications. The share of FHA loans slipped while VA loans rose. The USDA share remained unchanged at 0.4%.
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