Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights mortgage purchase applications.
- Mortgage rates rose last week, but more people applied to obtain mortgages. Mortgage applications for home purchase rose 4.8 percent, while applications for refinance jumped 9.2 percent.
- It is not uncommon after a period of very low rates for people to rush in at the first sign of a rising trend. They understand the great offerings may not last.
- The index for purchase applications is up 12 percent from one year ago, though the trend since the beginning of the year has been mostly sideways, with only slight ups and downs and no meaningful changes.
- Be mindful that the data measures only applications and not loan approvals. Assuming that the approval process is roughly same now as one year ago, the applications data would imply slightly better home sales this year versus last. Also, be mindful that a sizable number of homes are being sold all-cash this year – about one-third of all transactions – which are not captured in the mortgage data.
- Higher home sales trim away inventory at a faster pace and set the conditions for rising home prices. Other recent housing data have implied that the housing prices may indeed have stabilized and could soon be moving upward.
- The latest week’s average mortgage rate was 4.7 percent, up from 4.5 percent the week before. Expect 5.0 to 5.5 percent rate by the year end.