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Last week, despite the increase in mortgage rates, the demand for home loans surged. According to a report by the Mortgage Bankers Association (MBA), the Market Composite Index rose by 3.7% on a seasonally adjusted basis, with conventional and government loan demands increasing by 4.50% and 1.20%, respectively.
Moreover, mortgage applications for home purchases and refinancing increased by 4.7% and 1.7%, respectively.
Although the housing supply is still low, with buyers forced to consider less expensive or less desirable properties, many potential homeowners are actively searching online for the right house at the right price.
While rates are expected to increase ahead of the Federal Reserve’s upcoming meeting, experts are optimistic about some improvements in the housing supply.
In the week ending April 21, there was an uptick in demand for mortgages, with the composite index rising by 3.7% from the previous week.
The survey, which has been conducted since 1990 and covers over 75% of commercial mortgage applications in the United States, also showed an increase in applications for personal and government loans by 4.50% and 1.20%, respectively.
Additionally, mortgage applications for home purchases and mortgages rose by 4.7% and 1.7%, respectively.
According to MBA’s Vice President and Chief Economist, Joel Kan, there has been an increase in inquiries for home and government purchases over the past week.
However, sales activity is still almost 28% lower than last year’s pace due to high delivery costs and low supply, despite falling house prices in some markets across the country.
While refinance applications increased last week, they remain at half of last year’s level. The MBA data also shows that remittances accounted for 26.8% of total applications last week, a slight decrease from the previous week’s 27.6%.
The market saw an increase in mortgage rates ahead of the Federal Reserve meeting in May.
In its previous meeting in March, the FOMC raised the federal funds rate by 25 points, resulting in a rise in mortgage rates.
However, according to MBA data, the average interest rate for 30-year mortgages and mortgages ($726,200 or less) fell to 6.55% last week from 6.43% the previous week.
Similarly, jumbo loan rates (over $726,200) also fell from 6.28% to 6.40%. This trend indicates a potential decrease in mortgage rates, which may positively impact the market in the coming weeks.
Joel Kahn, MBA’s Vice President, and Deputy Chief Economist, noted that despite indications of a slowing US economy, the market still expects the Fed to raise short-term rates at its next meeting, resulting in higher Treasury yields.
This rise in yields has caused mortgage rates to increase for two consecutive weeks, reaching their highest level in over a month.
While there are some indications of a potential improvement in the housing supply, experts are still cautious and believe that it is premature to celebrate.
Altos Research data indicates that inventory for housing fell from 405,468 to 414,010 from April 14-21.
While there are some signs of improvement in inventory, with the highest number for 2023 so far at 472,680 and a floor of 240,194 for 2022, experts remain cautious.
According to Logan Mohtashami, head of research at HousingWire, both active and new listings fell over the past two weeks.
The Easter break could have impacted this decline, and Mohtashami advises that any gains in active commodities and new listings for the current week should be taken with a grain of salt until next week’s data becomes available.
Reference Source: Housingwire
