Mortgage volume is starting to rise again, and home buyers are fueling the increase.
Total mortgage application volume, including for refinancings and home purchases, rose 2.4 percent last week on a seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday.
Home buyers are seemingly undeterred by higher home prices and the limited number of homes for sale. Mortgage applications to buy a home increased 2 percent last week and are now 6 percent higher than a year ago.
The total volume is still nearly 14 percent below a year ago, mostly due to a drop in refinancing volume. Last week, mortgage applications to refinance increased 3 percent, but remain 32 percent below a year ago. Interest rates are higher now than they were last year, which provides less incentive for homeowners to refinance.
"Continuing strength in the job market and improving consumer confidence drove overall purchase applications to increase last week," says MBA economist Joel Kan. "The index for purchase applications reached its highest level since the beginning of October 2015, which was the week prior to the implementation of the federal government's 'Know Before You Owe' rule."
At that time, the public feared new mortgage documentation and processes would cause delays in the process, so buyers rushed to lock in their applications.
The average 30-year fixed-rate mortgage rate was 4.23 percent last week, unchanged from the previous week, the MBA reports.
Source: “Mortgage Applications Rise 2% as More Buyers Hit the Spring Market,” CNBC (May 10, 2017)
