Demand Slows With Mortgage Rate Increase

bobbybaldor Real Estate Leave a Comment

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates on 30-year fixed-rate mortgages with conforming loan balances rose slightly last week. In fact, average rates increased across most loan categories, including loans backed by the Federal Housing Administration and 15-year fixed-rate mortgages. Only 30-year loans with jumbo balances saw declines from the week before. Increasing rates caused a drop in refinance activity, which fell 4 percent from the previous week. On the other hand, the seasonally adjusted measure of demand for loans to purchase homes remained unchanged from one week earlier and is now 21 percent higher than it was at the same time last year. Because demand for purchase applications is a good indicator of future home sales, the year-over-year improvement is an encouraging sign that the spring selling season is off to a strong start and this year’s sales pace should be better than last year’s. Mortgage rates, though up from a week ago, remain well below historical norms and are among the reasons many analysts are optimistic about residential real estate this year. The MBA’s weekly survey covers 75 percent of all retail residential mortgage applications and has been conducted since 1990. More here.

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