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Mortgage demand for home purchases reversed course last week, after falling for the past month, the Mortgage Bankers Association reported Wednesday.
Mortgage applications to purchase a home increased 2% for the week and offered a signal that more first-time buyers may be emerging. Still, purchase applications are 18% lower than a year ago, the MBA said.
Higher prices and the scarcity of housing inventories have been blamed on slowing many segments of the housing market.
“The higher level of purchase activity last week was driven by more government purchase applications, including a 3.3% increase in FHA loans,” said Joel Kan, an MBA economist. “With low for-sale inventory keeping home price appreciation in many markets at record highs, the jump in FHA purchase applications is potentially a sign that more first-time buyers are finding purchase options despite the high prices.”
Mortgage rates rose slightly last week but remain near historical lows and didn’t prove to be a deterrent to home shoppers. The average contract interest rate for the 30-year fixed-rate mortgage with conforming loan balances rose to 2.99%, with points decreasing to 0.30, for loans with a 20% down payment, according to the MBA.
“Homeowners continue to respond to lower rates, with refinance activity climbing to the highest level since February 2021,” Kan said. Applications to refinance rose 3% last week but remain 8% lower than a year ago.