Home Loan Demand Spikes 15.6%, Average Rates Fall To 7.02%

Mortgage Applications Surge

Mortgage applications increased by 15.6% on a seasonally-adjusted basis from the previous week, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending June 7, 2024. On an unadjusted basis, the surge was even more significant at 26% week-over-week. This dramatic rise in mortgage applications provides a positive outlook for the housing market, driven by various factors including fluctuating mortgage rates and increasing home inventory levels.

“Mortgage rates were trending lower over the course of last week until a stronger than anticipated employment report resulted in a bounce back, with the weekly average for the 30-year fixed mortgage rate decreasing to 7.02 percent,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Lower rates earlier in the week meant a strong increase in refinance activity, particularly for VA borrowers, who jumped on the chance to lower their rates. Overall refinance activity was more than 27 percent above one year ago.”

Fratantoni added, “Multiple data sources are now indicating that home inventory levels, while still historically low, are up significantly from last year at this time. This is good news for many prospective homebuyers who have been frustrated by the lack of homes on the market.”

Share By Loan Type

  • Purchase Loans: Mortgages for the purchase of a home dipped to 64.8% from 68.9% the week before.

  • Refinance Loans: The refinance share of mortgage activity increased to 35.2% of total applications from 31.1% the previous week.

  • Adjustable-Rate Loans: ARMs accounted for 6.3% of total applications last week, down slightly.

  • FHA Loans: The FHA share of total applications decreased to 13.1% from 13.2% the previous week.

  • VA Loans: The VA share of mortgages increased significantly to 14.7% from 12.1% the week before.

  • USDA Loans: The USDA share of total applications increased to 0.4% from 0.3%.

Changes in Average Contract Interest Rates

  • 30-Year Fixed-Rate Mortgages (Conforming): The average contract interest rate decreased to 7.02% from 7.07%, with points unchanged at 0.65 for 80% loan-to-value ratio (LTV) loans.

  • 30-Year Fixed-Rate Mortgages (Jumbo): The average contract interest rate decreased to 7.18% from 7.21%, with points increasing to 0.54 from 0.41.

  • 30-Year Fixed-Rate Mortgages (FHA): The average contract interest rate remained unchanged at 6.87%, with points decreasing to 0.92 from 0.96.

  • 15-Year Fixed-Rate Mortgages: The average contract interest rate decreased to 6.60% from 6.75%, with points decreasing to 0.55 from 0.63.

  • 5/1 ARMs: The average contract interest rate increased to 6.45% from 6.37%, with points increasing to 0.81 from 0.63.

Looking Ahead

The latest data from MBA’s Weekly Applications Survey highlights a significant increase in mortgage applications, driven by lower mortgage rates and improved home inventory levels. The rise in refinance activity, especially among VA borrowers, and the overall increase in purchase activity indicate a more dynamic housing market. As mortgage rates continue to fluctuate, staying informed about these trends will be crucial for both prospective homebuyers and lenders navigating the current economic landscape.

(Source: mba.org)

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