Mortgage demand increases despite volatile interest rates
Despite some volatility in mortgage rates, mortgage demand rose for the second straight week.
According to the Mortgage Bankers Association’s seasonally adjusted index, overall application volume rose 6.5% last week compared to the previous week.
The average contract rate for 30-year fixed-rate mortgages with matching loan balances ($726,200 or less) fell from 6.79% to 6.71%, with points from 0.80 to 0.79 (including the setup fee) for loans with a decline 20% fell payment.
That was average, but mortgage rates were significantly higher for most of the week before falling sharply on Friday following news of Silicon Valley Bank’s bankruptcy.
Although interest rates were higher, homebuyer applications for the week were up 7% but still 38% lower than the same week a year ago. Home buying virtually ground to a halt in early February after interest rates rose a full percentage point, but buyers appear to be coming back now, perhaps on fears rates will hike even higher. The question is how long will that take?
“It always happens when interest rates go up, and it only lasts a couple of weeks,” said John Burns of John Burns Real Estate Consulting, who said he saw new-build home sales pick up in February despite higher interest rates.
lennarthe country’s second-largest homebuilder, reported better-than-expected earnings on Tuesday, with the company’s chairman Stuart Miller saying in the press release: “Homebuyers are considering the possibility that today’s interest rate environment could be the new normal. The housing market continues to shift as the increasing number of households and families continues to drive demand against a chronic shortage of supply.”
Applications for home loan refinance were up 5% from the previous week but were down 74% from a year ago.
According to a separate survey by Mortgage News Daily, mortgage rates continued to fall on Monday but rose again on the Tuesday after Consumer Price Index February was released suggesting the Federal Reserve could hike interest rates again next week despite the recent turmoil in the banking sector.
https://www.cnbc.com/2023/03/15/mortgage-demand-volatile-interest-rates.html Mortgage demand increases despite volatile interest rates