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The new year has sparked a glimmer of hope for homebuyers and refinancers alike as mortgage demand mounts despite increasing interest rates
New data from the Mortgage Bankers Association shows that the total mortgage application volume jumped nearly 10% last week compared to the prior week.
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- Mortgage applications see a 10% increase despite a slight rise in interest rates, according to the Mortgage Bankers Association.
- Refinance applications jumped 19%, indicating homeowners’ eagerness to secure lower rates before potential increases.
- The upcoming consumer price index report may influence future mortgage rates, highlighting the importance of economic indicators on the housing market.
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Mortgage Application Volume Soars 10% Despite Rising Rates, MBA Reports
What’s driving this surge in demand?
It’s a combination of factors.
The average rate for a 30-year fixed mortgage increased to 6.81% from 6.76% yet remains notably lower than the October 2022 peak of 8%.
The minor rate increase spurred a substantial 19% rise in refinance applications from the previous week as homeowners moved quickly to secure lower rates.
On the purchase side, applications rose 6% week-over-week despite the ongoing supply shortages and inflated home prices that have plagued buyers.
“The increase in purchase and refinance applications for both conventional and government loans is promising to start the year but was likely due to some catch-up in activity after the holiday season and year-end rate declines,” said Joel Kan, an MBA economist, in a release.
“Mortgage rates and applications have been volatile in recent weeks, and overall activity remains low.”
Real estate agents report swelling demand from sidelined buyers drawn back by the prospect of rates falling further.
But will rates continue their downward trend?
That depends on one major economic report coming this Thursday.
All eyes are on the consumer price index as a barometer of whether inflation is cooling.
Mortgage rates could spike again if prices rise more than expected, signaling that the Fed’s fight against inflation isn’t over.
That would slam the brakes on this growing surge in housing demand.
For now, buyers and refinancers can capitalize on favorable rates before the next economic winds shift.
But this window may close swiftly.
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