In The US, Mortgage rates experienced a slight uptick for the second consecutive week, though they are still within a range that is favorable to consumers.
The Mortgage Bankers Association reported a 9.9% increase in total mortgage application volume last week compared to the previous week, adjusting for the New Year's holiday. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose to 6.81% from 6.76%, with points remaining unchanged at 0.61 (including the origination fee) for loans with a 20% down payment. This rate had reached around 8% in October and lingered in the 7% range for a significant portion of the previous year.
Refinance applications surged by 19% from the prior week and were 30% higher than the same week a year ago. Although the 30-year fixed rate was 39 basis points higher than a year ago, it was 26 basis points lower than it was four weeks ago. While not all borrowers can capitalize on refinancing, those who can are entering the market swiftly, driven by the current rate environment.
Applications for home purchase mortgages increased by 6% for the week but remained 16% lower than the same week in the previous year. Buyers are grappling with limited housing supply and escalating home prices.
Joel Kan, an economist at the MBA, noted that the rise in both conventional and government loan applications is encouraging at the beginning of the year, but may be attributed to catch-up activity after the holiday season and year-end rate declines. Mortgage rates and applications have displayed volatility in recent weeks, and overall activity remains modest.
Despite this, real estate agents are observing a renewed surge in demand from buyers who were previously sidelined by the higher rate environment. Mortgage rates saw a slight increase at the beginning of the current week but still hover around the 6% range. The forthcoming release of the monthly consumer price index on Thursday serves as a crucial economic indicator; if it exceeds expectations and indicates a need for further measures to curb inflation, mortgage rates may experience additional upward movement.
Source: CNBC