After a Labor Day week lull, demand for mortgages rose sharply last week from homeowners and homebuyers.
According to the seasonally adjusted index of the Mortgage Bankers Association, the total volume of mortgage applications rose by nearly 5% during the week.
However, mortgage interest rates didn’t change over the last four weeks. With conforming loan balances less than $5548,250, the average 30-year fixed-rate interest rate remained at 3.03%. However points decreased to 0.30 (including origination fees) for loans that require a 20% downpayment.
Although applications for loans to buy a house rose by 2% over the past week, they were 13% less than last year. However, the annual average is decreasing. As record high prices combined with low supplies caused a dangerous mix, homebuyers have really pulled back this summer. The highest purchase demand since April was last week.
“Housing demand continues to be strong in the fall, despite high home prices rising and low inventory. Joel Kan (an MBA economist) said the inventory situation has improved with more homes being constructed and more people listing their property for sale.
Refinance applications for home loans increased by 7%, but they were still 5% less than one year ago.
Kan explained that this week’s increase in FHA or VA refinance applications was a major factor.
Federal government offers low-down-payment loans and they are often preferred by those with lower incomes or who are first time homebuyers.
According to another MBA report, mortgage applications for new homes increased unexpectedly in August. They tend to drop in August because of seasonality. However, demand seems to be rising despite strong price increases.