Mortgage demand moved up a little last week, as interest rates continue to rise. Total application volume increased by 1.7 percent, on a seasonally adjusted basis, compared with the previous week, the Mortgage Bankers Association (MBA) said. That comes after the previously flat mortgage application volumes extended a period of gains even though mortgage rates inched higher for the fourth straight week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less rose to 6.90% from 6.86%, a level last July. Average points also rose to 0.70 from 0.60; that reflects a slight uptick in overall borrowing cost.
However, home purchase mortgage applications increased by 2% week-over-week and are still 1% lower than the same week last year. Conventional and FHA loans drove this demand, with FHA purchase applications rising by 7%. Joel Kan, MBA’s economist, noted that increased housing supply in certain markets, along with a small dip in FHA rates compared to conforming rates, were factors contributing to this growth. The loosening of inventory allowed more potential buyers to take advantage of favorable conditions.
In contrast, applications to refinance home loans also saw a 2% increase from the previous week and were up 43% compared to the same week a year ago. A notable surge in VA loan refinancing, which saw a 10% rise, was a key driver behind this demand.
Mortgage rates, which had been on an upward trajectory earlier in the week, remained relatively stable after experiencing some fluctuations. Rates initially rose on Monday but decreased slightly on Tuesday, following geopolitical news about U.S. authorizations related to Ukraine and Russia, which spurred a “flight to safety” among investors, leading to lower bond yields.
Despite the volatility in the global market, mortgage rates remained broadly unchanged, a shift that many analysts found to be underwhelming in comparison to the gravity of the news. Matthew Graham, COO of Mortgage News Daily, remarked that the market’s response was muted, likely due to the recurring nature of such geopolitical threats and skepticism over the likelihood of escalation. While mortgage demand has seen modest growth despite rising rates, the market remains sensitive to broader economic and geopolitical shifts.
