The real estate market is signaling stronger sales ahead as homebuyers finally returned to the mortgage market after two weeks of weakening during the height of the spring housing season.
Home buyers are not deterred by the rising mortgage rates and, subsequently, are returning to the mortgage market.
On a seasonal adjusted basis, mortgage applications to buy a home grew 4% last week. These are viewed as a way to estimate future home buying activity. The Mortgage Bankers Association reports that purchase applications are now almost 5% greater than they were just one year ago.
“More prospective home buyers returned to the market after two weeks of decreases in purchase activity, which were possibly due to spring break season and Easter,” says Joel Kan, the MBA’s associate vice president of industry surveys and forecasting.
MBA also reports that home buyers were virtually unfazed by last week’s higher interest rates. The average 30-year fixed rate mortgage was 4.23%, up from last week’s 4.20%.
However, last weeks higher interest rates did discourage current homeowners from refinancing their homes. Applicatioins to refinance were down 5% last week. This decreased the Mortgage Bankers Association’s activity index by .1% for the week. This index totals the purchase and refinancing demand. Now, total mortgage application volume is 15% less than the same week in 2016. This is due to less refinancing activity. Volume for refinancing is 33% less than the same week in 2016, the Mortgage Bankers Association reports.
Source: “Mortgage Applications to Buy a Home Finally Spring Back, Climbing 5%,” CNBC (May 3, 2017)
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