The mortgage demand is increasing because mortgage rates continue with their decreasing trend. The last week witnessed a 7.4 percent increase in demand. The mortgage rates fell for the 6th consecutive week. According to MBA or the Mortgage Bankers Association, this caused the market’s composite index, a gauge of the number of mortgage applications, to rise or increase.
For the week ending on February 3, the market index rose 7.4 percent from the last week to 249.5. This index’s value a year ago was 567.7. The refinancing index rose 17.7 percent. However, it was down 75 percent from a year earlier. As measured by the buying index, mortgage applications for purchasing a house increased by 3.1 percent from the last week.
For the week ending on February 3, the contract rate for a thirty-year mortgage for houses sold for dollars 726,200 or less was 6.18 percent. According to the Mortgage Bankers Association, that is down from 6.19 percent in the last week. The thirty-year average rate for properties sold for more than $ 726,200 was 5.96 percent. The average loan amount for the purchase application was about dollars 428,500. This is according to the Mortgage Bankers Association, and this is the highest average since May 2022.
But, there are still problems with affordability and lower-than-average inventories. This is because few alternatives are available to the buyers, and reduced rates cannot make much difference for a price-conscious buyer.
So, according to the MBA deputy chief economist and vice president, Joel Kan, the outcomes of this week are a positive start. He said the purchase activity stopped last year because of the rise in rates and is now returning as rates relax. Home demand remains robust, backed by supporting demographics and the continued strength in the employment market.