Reduced mortgage rates and more available properties are attracting potential purchasers. Last week, individuals who were considering refinancing backed off, which increased demand for mortgages.
The seasonally adjusted index from the Mortgage Bankers Association showed a 2.8% increase in the overall volume of mortgage applications over the previous week. The Thanksgiving holiday was also taken into account.
For 30-year fixed-rate mortgages with conforming loan sums of $766,550 or less, the average contract interest rate dropped from 6.86% to 6.69%, and for loans with a 20% down payment, the points dropped from 0.70 to 0.67. For over a month, that rate has been the lowest.
Mortgage applications for house purchases increased by 6% over the course of the week, reaching their highest level since January. Thanksgiving came on a different week this year than last, so there might be some noise in the annual comparison, but applications were 21% lower than they were during the same week last year.
Joel Kan, an MBA economist, stated in a release that the recent surge in purchase activity is still going strong because of lower interest rates and larger inventory levels, which are providing potential buyers with more options than they had earlier in the year.
The number of home loan refinance applications dropped 1% for the week and was 7% fewer than a year ago. The majority of consumers now have loans with interest rates that are significantly lower than those available today.
According to Kan, FHA and VA refinances increased compared to a week ago, while conventional refinance applications decreased in spite of the reduced rates.
Starting this week, mortgage rates continued to fall, but not much. Investors are balancing some upbeat economic remarks from several Federal Reserve speakers Tuesday afternoon against the geopolitical developments from South Korea and France.
The release of the ISM services index and the ADP jobs report on Wednesday will provide additional market-moving economic data. At The New York Times DealBook Summit, Jerome Powell, the chairman of the Federal Reserve, will also participate in a moderated discussion.
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