Mortgage Applications from Homebuyers Surge by 12% in One Week
If inflation numbers decline, it may prompt the Federal Reserve to lower its benchmark rates, potentially leading to an increase in applications.
According to the Mortgage Bankers Association (MBA), there was a surge in mortgage loan applications for home purchases following a decrease in interest rates. Overall, mortgage loan application volume, including both home buying and refinancing applications, rose by 6.3 percent for the week ending Nov. 22, compared to the previous week. This increase is the largest since late September, with home purchase applications seeing a 12 percent jump.
“Purchase activity drove the overall increase in applications last week, as conventional purchase applications gained momentum and mortgage rates dropped for the first time in over two months, with the 30-year fixed rate decreasing slightly to 6.86 percent,” said MBA Deputy Chief Economist Joel Kan.
The weekly average rate for a 30-year fixed-rate mortgage hit a low in late September before starting a steady upward trend.
Rates have been stabilizing in recent weeks as the markets await more clarity on economic policies, as mentioned by Freddie Mac’s chief economist, Sam Khater. Despite low sales activity, demand remains subdued due to potential homebuyers waiting on the sidelines. Inventory has improved slightly, but remains significantly undersupplied.
Estimating rates for the rest of the year has become challenging, with key economic data, including inflation and employment figures, set to be released in the coming weeks. This data could offer insights into the future of mortgage rates.
Investor demand for home purchases has also leveled off, according to a report from Redfin. In the third quarter, investors bought nearly half the number of homes they were purchasing a year earlier.
Zillow is forecasting a 2.8 percent increase in home prices over the next year, with 4.3 million existing homes projected to be sold in 2025, up from four million units expected this year. Inventory shortages and the potential decline in mortgage rates are factors supporting home prices, according to Zillow.
