A “For Sale” sign outside a home in Atlanta, Georgia on Friday, February 17, 2023.
Dustin Chambers | Bloomberg | Getty Images
After falling to a 28-year low last week, mortgage demand recovered slightly even as interest rates marched higher.
Total mortgage applications rose 7.4% last week, according to the Mortgage Bankers Association’s seasonally adjusted index.
This happened even though the average contract rate for 30-year fixed-rate mortgages with matching loan balances ($726,200 or less) rose from 6.71% to 6.79%, with points going from 0.77 (including the setup fee) to 0.80 for credit increased with a 20% deposit. This is the highest level since November 2022 and 270 basis points higher than a year ago.
“Even at higher rates, there was an increase in applications last week, but this compared to two weeks of declines at very low levels, including a holiday week,” noted Joel Kan, an MBA economist.
Applications for home loan refinance rose 9% week-on-week but were down 76% from the same week a year ago. At last week’s rate, there were barely 200,000 borrowers who were able to make monthly savings by refinancing, compared with well over 2 million who would have benefited from the rate a year ago, according to calculations by Black Knight, a mortgage data and analytics company.
Mortgage applications to buy a home rose 7% on the week and were 42% lower than the same week a year ago. There’s more inventory on the market now than there was a year ago, but new listings are still weak, suggesting what’s for sale isn’t selling very quickly.
The jump in demand could just be the start of the traditionally busy spring market. However, the share of adjustable-rate mortgage applications rose last week, suggesting more buyers are looking to afford today’s still-expensive housing market. ARMs offer lower interest rates with higher risk.
Mortgage rates have risen even higher, topping over 7%, according to a separate survey by Mortgage News Daily. Federal Reserve Chair Jerome Powell told lawmakers on Capitol Hill Tuesday that rate hikes could accelerate again. That spooked investors and pushed bond yields higher. Mortgage rates are loosely tracking the 10-year Treasury yield.
“Although Fed Chair Powell said nothing notably new or different, markets have read enough of his statement to change the course of Fed funds rate expectations in a meaningful way,” said Matthew Graham, chief operating officer of Mortgage News Daily.