Homebuyers leaped off the fence when mortgage rates decreased last week. According to the seasonally adjusted index of the Mortgage Bankers Association, they increased overall mortgage demand by 6.3% over the previous week.
For 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less, the average contract interest rate dropped from 6.90% to 6.86%. For loans with a 20% down payment, points, including the origination charge, stayed at 0.70.
A good amount of pent-up demand among homebuyers was present, even though the rate drop wasn’t particularly significant. Some were hoping for additional supplies, some for reduced rates, and some for the election to be over. Those are all finished now.
Mortgage applications for house purchases rose 12% over the previous week and 52% over the same period last year. Mortgage rates were higher at this time last year, but they are already declining. However, the number of available residences was very limited. This year, it has significantly improved.
Despite recent rate increases, buyers have stayed in the market due to the increase in for-sale inventory and indications that the economy is still doing well. Joel Kan, an MBA economist, stated in a release that the rise in conventional buy applications contributed to the average purchase loan size reaching $439,200, its highest level in nearly a month.
Despite a 3% weekly decline, home loan refinance applications were 119% greater than they were a year earlier.
There is a flaw in the yearly comparisons, though.
Pullbacks in FHA and VA refinances were the main cause of the drop in refinance activity. By most criteria, the number of applications was far larger than it was a year ago, but Kan pointed out that this was in contrast to the week of Thanksgiving 2023, which was one week ahead of this year’s holiday.
Mortgage rates began the week marginally lower, but following the release of economic data on Wednesday, they may move more significantly. The markets generally, and the bond markets in particular, are erratic during holiday weeks.
Due to the special market conditions brought forth by a somewhat shortened trading week, there may be some erratic trading in either way during Thanksgiving week, according to Matthew Graham, chief operating officer at Mortgage News Daily.
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