According to the Mortgage Bankers Association, lower interest rates in mortgages resulted in an increase in mortgage demand.
This came as a surprise to both consumers and buyers, especially after the Christmas season.
Typically, there is a decrease in new listings during the holiday season. This happens as a result of pausing the listing of homes. But the experts cite supply and lower interest rates as reasons for the rise in mortgage demand.
The mortgage demand rose to 28% in one week (ending Jan 13th) compared to a week earlier. This data is according to the Mortgage Bankers Association’s seasonally adjusted index. The mortgage rates have taken a dip since September. The new demand in the mortgage market is a result of the same.
From one week earlier, the seasonally adjusted purchase index increased by 25%. The unadjusted purchase index increased to 32% compared to the prior week. It was 35% lower compared to the same week one year ago.
Mike Fratantoni, Mortgage Bankers Association Chief Economist and Senior Vice President said,
“As we enter the beginning of the spring buying season, lower mortgage rates and more homes on the market will help affordability for first-time homebuyers.”
He noted that the application activity rebounded strongly in the first week of January. There was an increase in refinance and purchase activity in double-digit percentages compared to last week.
He added that refinance activity remains 80% below the same week one year ago despite these gains. The level of Purchase volume remains 35% lower than a year ago.
The average contract interest rate for a 30-year fixed-rate mortgage was down to 6.23% last week from 6.42% the prior week.
A mortgage application to purchase a home rose to 25% but was 35% lower than the same week one year ago.
According to Redfin, a real estate brokerage, a 21% rise in active listings compared to a year ago is noted. Whereas the new listings of homes put up for sale have gone down by 22%.
According to the National Association of Home Builders’ report on Wednesday, in January, the builder confidence for newly-built single-family homes rose to 35. This happened as a result of a drop in interest rates.
Triangle MLS reported that December 2022 saw 1,966 new listings. This shows a dip of 30% compared to December 2021. The listings were 2,975 back then.