Mortgage loan application volume saw a double-digit increase last week as sinking rates led to a purchase demand rebound.
The Mortgage Bankers Association’s weekly survey showed the adjusted Market Composite Index, a measure of mortgage loan application volume, jumped by 27.9%.
Purchase demand increased at a seasonally adjusted rate of 25% and an unadjusted rate of 32%.
Though it remains 35% below last year’s levels, the increase is good news for brokers whose businesses have been impacted by affordability issues and high rates.
Mortgage rates fell to 6.23% last week.
“Mortgage rates are now at their lowest level since September 2022, and about a percentage point below the peak mortgage rate last fall,” said Mike Fratantoni, MBA’s SVP and Chief Economist.
“As we enter the beginning of the spring buying season, lower mortgage rates and more homes on the market will help affordability for first-time homebuyers.”
First-time buyers face pressure on all sides as the market corrects. High interest rates lower their chances of affording a monthly payment, while home prices remain elevated due to cash-flush older homeowners who can leverage their equity.
Data from NAR found that the share of first-time homebuyers fell to its lowest point in the data’s history, while their median age rose to the highest ever, 36 years old.
Ed Pinto, director of the AEI Housing Center at the American Enterprise Institute, said that lenders, real estate agents, and home sellers have benefited from rising rates, while others have been sidelined.
“Left out as beneficiaries are first-time buyers,” he told Fortune. “Rather than being a boon, housing is getting further out of reach as entry-level home prices soar.”
Lenders like Fairway, First Home Mortgage, and Bank of America have introduced new products designed to lessen the burden of homeownership for first-timers.
Refinances also saw some improvement, up 34% from the week prior.
They remain 81% lower than the same time last year, however, comprising only 31.2% of total applications. In the past decade, refis averaged 58% of total activity.
Other key findings include:
The ARM share of activity fell from 7.3% to 6.6% of all applications.
The FHA share of total applications dipped from 13.4% to 13%, with an average interest rate of 6.26%.
The VA share fell from 13.2% to 11.8%, and the USDA share remained unchanged at 0.6%.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances decreased from 6.09% to 6.08%, and for 5/1 ARMs fell from 5.43% to 5.31%.
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