their names: Homebuyers appear to have adjusted to higher rates as mortgage applications rose last week despite rates holding steady.
Rates were unchanged from last week, remaining at a 23-year high as the market remained uncertain about the US Federal Reserve’s plans to raise short-term interest rates.
The 30-year rate averaged 7.31%, its highest level since December 2000.
Still, the demand for purchases and refinances has increased. That pushed the composite market index – a measure of mortgage application volume – higher overall, the Mortgage Bankers Association (MBA) said on Wednesday.
The stock index rose 2.3% to 189 for the week ending August 25 from the previous week. A year ago, the index stood at 260.1.
Key details: Home buying and refinancing applications increased for the first time in five weeks.
Some buyers may have accepted the new 7% rate standard, choosing to refinance later when they drop. The Buy Index – which measures mortgage applications for the purchase of a home – rose 2% from last week.
On an annual basis, purchase requests are still down 27%.
And some owners took the opportunity to refinance. The refinancing index increased by 2.5%.
The average contract rate for 30-year mortgages for homes sold for $726,200 or less was 7.31% for the week ending August 25. This rate is unchanged from the previous week, the MBA said.
The rate for jumbo loans, or 30-year mortgages for homes sold for more than $726,200, was 7.28%, up from 7.27% the previous week.
The average rate for a 30-year mortgage guaranteed by the Federal Housing Administration fell from 7.09% to 7.1%.
The 15-year remained stable at 6.72% compared to the previous week.
The variable rate mortgage rate fell to 6.48% from 6.5% last week.
The big picture: Typically, when rates rise, buyers pause until they drop. But with stocks as low as they are, some are choosing to act quickly and buy now — whatever the rate — and refinance later. This is reflected in the slight increase in applications this week.
What the MBA says: “Treasury yields peaked at the start of the week and fell at the end, which may have spurred some activity,” Joel Kan, deputy chief economist and vice chairman of the MBA, said in a statement.
Market reaction: The yield on the 10-year Treasury note BX:TMUBMUSD10Y was below 4.2% on Wednesday morning.
2023-08-30 17:21:54
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