Key Takeaways:
– Recent data points to a stronger start of this year for mortgage demand compared to last year.
– There is a 7% rise in the total mortgage application volume last week compared to the same period last year, as per Mortgage Bankers Association.
– The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 7.09% from 6.99%.
In a surprising twist of events, the demand for mortgages began the year with a stronger start than we saw exactly a year ago. This come as a surprise as interest rates are on an upward trajectory. Let’s take a deeper look at what this means.
Upswing in Mortgage Applications
Last week, the total volume of mortgage applications was 7% higher than what it was during the same period last year. This notable increase comes from data provided by the Mortgage Bankers Association. Even though the seasoned index was adjusted for seasonal fluctuations, the rise in demand signals an active housing market.
Navigating Higher Interest Rates
At first glance, these figures might seem a bit confusing. After all, higher interest rates are usually associated with lower demand for mortgages. However, here we are, witnessing a situation where the opposite is happening.
The average contract interest rate for 30-year fixed-rate mortgages with confirming loan balances increased to 7.09% from 6.99%. Yet, this hike in rates didn’t put a damper on the mortgage fervor. Simply put, people are still hungry for home loans.
Points Shift Lower
An interesting twist in our tale is the slight decrease in point values. As the interest rates inched up, the points reduced to 0.65 from 0.68. Don’t get too distracted here: points are fees that a borrower pays to a lender at the time of closing. Financial jargon aside, the smaller the pointers, the better the deal for homebuyers.
Decoding the Upswing
It’s pretty normal to ask why the mortgage demand is rising even though interest rates are higher than before. One possible reason could be that people fear that the rates may rise even further. So, they are applying for mortgages now to secure the cheaper rates while they still can.
However, this is just one theory. The housing market is influenced by many factors, and it can be tricky to pick out just one explanation for the rising demand. With time and more data, we’ll have a clearer picture.
What this Means for Home Buyers
What does all this mean to someone looking to buy a home? Simply put, if you’ve been on the fence about applying for a mortgage, now might be a good time to take the plunge. With the current trend, interest rates are likely to climb further in the near future.
Despite the higher interest rates and the possibility of them rising even further, the housing market seems vibrant and active. The noticeable increase in mortgage demand suggests that homebuyers are still finding value in the market and are willing to take on higher interest rates.
So there you have it! Interest rates might be on the rise, but so is the demand for mortgages. As unpredictable as it may seem, it’s just the nature of the marketplace. Be smart, stay informed, and remember, buying a home is more marathon than a sprint. Happy house hunting!