Demand for mortgages rises for the first time in six weeks

Mortgage application volume rose last week for the first time in six weeks, according to the Mortgage Bankers Association, despite a rise in interest rates.

Sudden fluctuations in interest rates and uncertainty about the general direction of the housing market are likely to be at stake.

The average contract rate for 30-year fixed-rate mortgages with matching loan balances ($647,200 or less) increased to 6.25% from 6.01[ads1]%, with points reduced to 0.71 from 0.76 (including the origination fee) for loans at 20% decline. payment.

“Treasury rates continued to climb higher last week in anticipation of the Federal Reserve’s meeting in September, where they are expected to announce — in their bid to curb inflation — another significant short-term rate hike,” said Joel Kan, an MBA economist . , in a release.

Applications to refinance a mortgage, which are usually very sensitive to large interest rate swings, actually rose 10% for the week, although they were still 83% lower than the same week a year ago. Some of that may have been due to the holiday adjustment last week. It may also have been that the very few borrowers left who could benefit from a refinance finally got off the fence, as interest rates could climb even higher for the foreseeable future.

“The weekly increase in applications, despite higher rates, underscores the overall volatility right now, as well as Labor Day-adjusted results the week before,” Kan said.

Mortgage applications rose 1% for the week, but were 30% lower than the same week a year ago. Buyers now see less competition in today’s expensive market, so some may jump in when they have the chance. Homes are on the market longer and sellers are far more willing to negotiate than they were three months ago.

Still, prices haven’t really fallen much yet, and with prices as high as they are now, affordability is historically weak. The small weekly increase in mortgage demand does not really represent the sharp correction taking place in home purchases.

Mortgage rates shot even higher this week, according to a separate survey by Mortgage News Daily. It showed the average rate on the 30-year fixed just below 6.5% on Tuesday, ahead of the much-anticipated Federal Reserve meeting on Wednesday. Investors will be looking in particular for comments, not about a current rate hike, but about what might be coming.

“The forecasts will intensify the volatility we have already seen with the decision to raise interest rates. In addition, [Fed Chairman Jerome] Powell’s press conference always has the potential to add further volatility,” wrote Matthew Graham, CEO of Mortgage News Daily.