Weekly Mortgage Demand Higher Despite Rising Interest Rates

According to CNBC, despite mortgage rates hitting a four-month high, the Mortgage Bankers Association (MBA) reported that overall mortgage application volumes rose by 1.7% last week. 

By The Numbers

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose to 6.90%, up from 6.86% the week prior.

Notably, higher rates didn’t deter homebuyers, as purchase mortgage applications climbed 2% for the week. FHA loans saw the most significant uptick, with purchase applications rising 7%. Conventional loan applications also contributed.

Picking Up The Pace

MBA economist Joel Kan noted that loosening inventory in some markets and slightly lower FHA rates helped potential buyers: “For-sale inventory has loosened in some markets, and some potential buyers have been able to take advantage of increasing supply and lower FHA rates.”

Refinance applications also rose 2% for the week, a 43% increase compared to the same week a year ago. The demand for refinancing was largely driven by VA loan applications, which surged 10%.

Zooming Out

Overall, mortgage rates have fluctuated this week, influenced mostly by geopolitical developments. Bond yields dipped as investors sought safety amid escalating tensions between Ukraine and Russia. However, the impact on mortgage rates was muted.

Matthew Graham, COO at Mortgage News Daily, commented: “The improvement in mortgage rates was wholly underwhelming relative to the news headlines.”

Looking Ahead

While mortgage rates remain higher than homebuyers would like, demand for both purchase and refinance loans reveals some resilience. 

Easing inventory in some regions and favorable conditions for FHA loans could also sustain demand, even as rates hover near recent highs.