Mortgage demand up last week

An Open House flag is displayed outside a single family home on September 22, 2022 in Los Angeles, California.

Allison Dinner | Getty Images

The stress in the banking system has been a boon for the US mortgage market. While investors hid in the relative safety of the bond market, yields fell further last week. Then mortgage rates followed.

Accordingly, the demand for mortgages rose by 2.9% compared with the previous week. Association of Mortgage Bankersseasonally adjusted index. However, the streak may be short-lived as rates are now rising again.

Last week, the average contractual interest rate for 30-year fixed-rate mortgages with a qualifying loan balance ($726,200 or less) fell to 6.45% from 6.48%, with the interest rate falling to 0. 62 from 0.66 (including issuance fee) for loans with 20% prepayment. In the same week a year ago, the figure was 4.8%.

Mortgage refinancing applications increased 5% on the week but were still 61% lower year on year. The vast majority of homeowners today have mortgages with interest rates well below today’s rates, leaving them with little incentive to refinance. Those looking to get capital are mostly opting for second loans rather than foregoing the rates they have with cash refinancing.

Mortgage applications to buy a home increased 2% in a week but were 35% lower than the same week a year ago. Buyers return to the market due to the traditionally busy spring season, but find very little for sale.

“House price growth has slowed markedly in many parts of the country, helping boost buyers’ purchasing power,” MBA economist Joel Kahn said in a release. “While the 30-year flat rate remained 1.65 percentage points higher than a year ago, homebuyers have responded, leading to a fourth straight increase in bids.”

However, mortgage rates have risen more than 20 basis points since the start of this week, according to a separate Mortgage News Daily survey. With no more bank failures in the news this week and no major economic data affecting investors, rates could return to the higher trajectory they were on before the bank troubles hit.

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