Mortgage applications up as rates pull back

Moving Furniture into New Home | mortgage rate news

Mortgage applications up week-over-week

Mortgage applications were up 2.6% on a seasonally adjusted basis during the week ending May 3rd according to the Mortgage Banker’s Association’s weekly survey.

Mike Fratantoni, MBA’s senior vice president and chief economist, wrote, “Treasury rates and mortgage rates fell last week on the news of a slowing job market, with wage growth at the slowest pace since 2021, and the Federal Reserve’s announced plans to ease quantitative tightening in June and to maintain its view that another rate hike is unlikely.”

Purchase loans saw a 2% increase from the previous week. Gains were driven by a 5% improvement in FHA mortgage applications.

Fratantoni wrote, “First-time homebuyers account for roughly half of purchase loans, and the government lending programs are an important source of financing for these homebuyers. The gain in FHA activity is a sign that this segment of the market is active.”

Mortgage refinance demand also increases

Demand for mortgage refinance increased by 5% last week as mortgage rates continued to cool off from previous highs.

Refinancing represented 30.6% of all applications. That’s up from 30.2% of all applications last week.

Mortgage refinance often gains in popularity any time we see a dip in mortgage rates, and that’s exactly what happened last week. Whether we continue to see rates cool off in the short term depends largely on next week’s inflation data. A cool inflation report could provide further support, but hotter than expected data has a chance to send us right back up.

Could home sellers be facing a tough summer?

According to a recent article from Business Insider, we could see a shift in the housing market this summer. We’ve seen the scales tip from an extreme seller’s market to a market that’s a bit closer to balance, but that could change over the next few months.

We’ve already seen dramatic increases in home inventory in most major metro areas across the country. We’ve also seen 33.5% of single-family homes on the market see a price cut from their original asking prices. While home prices aren’t cooling dramatically, we are seeing predictions that home prices will be closer to flat than they will be to the increases of previous years.

If current trends continue through the rest of the Spring and into the Summer, we could see the shift that homebuyers have been waiting for.

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