An increase in mortgage rates didn’t suppress loan demand in the kickoff to the spring buying season. Loan applications for both refinancings and home purchases jumped 4.8 percent last week on a seasonally adjusted annual basis, the Mortgage Bankers Association reported Wednesday. Mortgage applications are now at the same level as a year ago.
Applications for home purchases, viewed as a gauge of homebuying activity, increased 3.1 percent from the previous week. This is the third consecutive week that purchase applications have been on the rise. Applications are now 8.2 percent higher than a year ago, the MBA reports.
“We remain cautiously optimistic that purchase activity will continue to pick up as we enter the spring homebuying season,” says MBA economist Joel Kan.
Refinance applications last week increased 7.3 percent, but are still down more than 10 percent from a year ago.
The increases in refinancing and home purchase applications came during a week when mortgage rates were back on the rise, too. The 30-year fixed-rate mortgage averaged 4.69 percent last week, up from 4.68 percent the week prior, the MBA reports.
So far, rising mortgage rates aren’t spooking potential buyers, according to a study recently released by Redfin, a real estate brokerage.
The survey conducted last month found that even if interest rates increased above 5 percent, only 6 percent of prospective buyers would scrap their plans to then buy a home.
“Mortgage rates are still really cheap compared to the historical average,” says Nela Richardson, Redfin’s chief economist. “Over the last 50 years or so, mortgage rates have averaged around 8 percent on the 30-year fixed-rate mortgage, and have been much higher, topping 18 percent in the 1980s. Rates now are still below 5 percent.”
Source: “Weekly Mortgage Applications Rise Even as Rates Increase,” CNBC (March 28, 2018)
