A home is offered for sale on March 22, 2024 in Chicago, Illinois.
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Overall mortgage demand has now moved sideways for three straight weeks, but last week there was a divide between those looking to buy a home and those hoping to save money through refinancing.
Total mortgage application volume rose just 0.1% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index, which was mostly flat.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased from 6.91% to 7.01%, with points remaining at 0.59 (including origination fees) for loans with a 20% down payment.
“Mortgage rates rose last week as several Federal Reserve officials reiterated their patience on rate cuts. Inflation remains stubbornly above the Fed’s target and the economy as a whole continues to “The unexpectedly strong jobs data released last week further increased upward pressure on rates,” said Joel Kan, MBA vice president and deputy chief economist.
Requests to refinance a home loan jumped 10% over the week and were 4% higher than the same week a year ago. Demand for refinancing typically declines when rates rise, but rates had fallen slightly in previous weeks, so some homeowners may have been waiting for them to drop even further. When rates rose last week, they may have been afraid that rates would rise further and so jumped at the opportunity to take advantage of the savings they could.
Mortgage applications to buy a home fell 5% for the week and were 23% lower than the same week a year ago. The spring market is on track and while there is a little more inventory today than a year ago, it is still well below the level where it should be subject to a strong demand. Property prices also show no signs of slowing down.
Investors were awaiting the very important monthly report on consumer prices, an indicator of inflation. It is expected to be released Wednesday morning and, depending on the outcome, mortgage rates could move sharply in either direction.
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