Single family homes in a residential neighborhood in San Marcos, Texas.
Jordan Vonderhaar | Bloomberg | Getty Images
After stagnating the week before, mortgage demand rose last week even as mortgage rates rose for the fourth week in a row. According to the Mortgage Bankers Association's seasonally adjusted index, overall application volume increased 1.7% compared to the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased from 6.86% to 6.90%, with points on loans at 20% down from 0.60 to 0.70, inclusive the processing fee) increased payment. That was the highest level since July.
Mortgage applications to purchase a home rose 2% this week, but were down 1% from the same week last year. Purchase demand was driven by conventional and FHA loans, with FHA purchase applications seeing a 7% increase.
“Inventory for sale has decreased in some markets and some potential buyers have been able to benefit from increasing supply and lower FHA rates, which have declined slightly compared to the equivalent 30-year fixed rate,” said Joel Kan, an MBA economist, in a press release.
The number of applications to refinance a home loan rose 2% this week, 43% higher than the same week a year ago. Demand was driven by a 10% increase in VA applications.
Mortgage rates are nearly unchanged so far this week, according to a separate survey from Mortgage News Daily. They rose on Monday but fell on Tuesday when it was announced that the US had allowed Ukraine to use long-range missiles to attack Russia, after which the country officially changed its doctrine on the use of nuclear weapons. Bond yields fell amid a so-called flight to safety by investors.
“The improvement in mortgage rates was completely disappointing compared to the headlines – probably because it is far from the first such threat from Russia, or because traders are skeptical that anyone has hit one of the red buttons on the 'mutually secured' machine “Want to press 'destruction',” wrote Matthew Graham, chief operating officer at Mortgage News Daily.