A rebound in mortgage rates didn’t deter homebuyers last week, with demand for purchase loans climbing for a second week in a row.
A weekly survey by the Mortgage Bankers Association found applications for purchase loans grew week over week by a seasonally adjusted 2 percent. Even though purchase loan requests were down 6 percent from a year ago, the off-season demand from homebuyers in the face of rising rates could bode well for home sales in coming weeks, said MBA forecaster Joel Kan.
“Purchase applications increased for both conventional and government loan segments, as housing demand continues to show resiliency at a time – late fall – when home buying activity typically slows,” Kan said in a statement. “The second straight increase in purchase applications suggests that stronger sales activity may continue in the weeks to come.”
Kan said demand for refinancing has been “particularly sensitive to rate movements,” and that requests to refinance were down 5 percent week over week, and 31 percent from a year ago. Requests to refinance accounted for 62.9 percent of all applications, down from 63.5 percent the week before.
After two weeks in decline, mortgage rates bounced back last week. The MBA reported average rates for the following types of loans during the week ending Nov. 12:
- For 30-year fixed-rate conforming mortgages (loan balances of $548,250 or less), rates averaged 3.20 percent, up from 3.16 percent the week before. With points increasing to 0.43 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, the effective rate increased from last week.
- Rates for 30-year fixed-rate jumbo mortgages (loan balances greater than $548,250) were unchanged from a week ago at 3.26 percent. But with points increasing to 0.39 from 0.32, the effective rate did increase from last week.
- For 30-year fixed-rate FHA mortgages, rates averaged 3.23 percent, up from 3.18 percent. With points increasing to 0.41 from 0.31, the effective rate also increased from last week.
- Rates for 15-year fixed-rate mortgages averaged 2.56 percent, up from 2.52 percent the week before. With points increasing to 0.36 from 0.33, the effective rate also increased from last week.
- For 5/1 adjustable-rate mortgage (ARM) loans, rates averaged 2.89 percent, up from 2.82 percent the week before. Although points decreased to 0.16 from 0.25, the effective rate also increased from last week.
As the Federal Reserve withdraws its support for mortgage markets over the next eight months, interest rates are expected to rise.
Forecasters at the Mortgage Bankers Association project that rates on 30-year fixed-rate mortgages will average 4 percent by the end of next year. Fannie Mae economists expect a more gradual rise, with averaging 3.4 percent during the fourth quarter of 2022.
Mortgage rate forecasts diverge
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