Mortgage loan application volume rebounded last week, breaking a weeks-long streak of declines, according to the Mortgage Bankers Association’s weekly survey.
The adjusted Market Composite Index, a measure of mortgage loan application volume, increased by 3.2%.
The adjusted purchase index rose by 4%, though the unadjusted purchase index decreased by 1% and was 38% lower YOY.
“Mortgage rates increased slightly after a month of declines, as financial markets reacted to mixed signals regarding inflation and the Federal Reserve’s next policy moves. The 30-year fixed rate inched to 6.42%, which is still close to the lowest rate in a month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
The Federal Reserve is expected to raise interest rates by half a point after its policy meeting, tapering off from its three-quarter point hikes in the last few months.
This remains well above its typical quarter-point hike. But recent inflation numbers have surpassed expectations, suggesting it could cool in the next year.
“With inflation continuing to fade and fiscal policy likely on hold, the Fed is likely to end its tightening cycle early in the new year and inflation could begin to ease before the end of 2023,” JPMorgan analysts recently wrote in a note.
Mortgage rates have come down from 7% as demand has dwindled, though applications are still unusually low.
“Overall applications increased, driven by increases in purchase and refinance activity. However, with rates more than three percentage points higher than a year ago, both purchase and refinance applications are still well behind last year’s pace,” Kan added.
Refinances rose again, up 3% from the week prior.
They remain 85% lower than the same time last year, however, comprising 29.4% of total applications.
The ARM share of activity rose by 0.1% to 7.7% of applications.
The FHA share of total applications dipped to 13.1% from 13.7%, with an average interest rate of 6.40%.
The VA share rose to 11.5% from 11.4%, and the USDA share remained unchanged at 0.6%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose from 6.41% to 6.42%.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances increased to 6.14% from 6.08%, and for 5/1 ARMs fell from 5.59% to 5.58%.
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