Mortgage demand surges in early July
Mortgage applications for both home purchases and refinancings increased 2.5 percent last week on a seasonally adjusted basis, according to the Mortgage Bankers Association’s latest report. The rise was fueled entirely by an uptick in home purchase applications.
Mortgage applications for home purchases surged 7 percent in the week and are now 8 percent higher than a year ago, the MBA reports. Abounding housing shortages have mostly kept a lid on any notable increases in home sales this summer, but that gradually may be changing.
“Even though inventories continue to decline, they are doing so at a slower pace,” says Danielle Hale, chief economist at realtor.com®. “In other words, while buyers continue to see fewer homes available for sale, the decline was smaller than what we’ve seen in previous months. Before we see inventories increase, we need to see them slow, and the data has shown four months of deceleration (smaller year-over-year declines).”
Buyer demand continues to be strong from a strengthening job market, says Mike Fratantoni, the MBA’s chief economist.
Despite last week’s uptick, mortgage applications remain 4.3 percent lower than a year ago. Most of that is due to a plunge in the number of borrowers who are refinancing. Mortgage rates are higher than a year ago, which is erasing the incentive for most homeowners to refinance. Mortgage applications to refinance a home loan last week dropped 4 percent and are now at their lowest level since December 2000.
The 30-year fixed-rate mortgage averaged 4.76 percent last week, down from 4.79 percent the week prior, the MBA reports. Mortgage rates remain elevated compared to last year but the increases have been minimal this summer, so far.