Home Mortgage Applications Reached a Nine-Year High Last Week
Despite some parts of the country seeing snow this past week, make no mistake that it is officially spring. That means that, in addition to blooming trees and allergies, it’s time for home sales to pick back up after the slower winter season. On that note it seems that the homebuying bug is already biting as mortgage applications to purchase recently rose to a nine-year high.
As CNBC reports, mortgage applications to purchase homes rose 1% last week compared to the prior week. While that may be a small bump, it represents a 7% year over year increase and brought applications to a high not seen since April of 2010. At the same time, overall mortgage applications fell 3.5% from the previous week mostly due to demand for refinancing falling. Nevertheless the volume of total applications was up 14% from last year.
Speaking of refinancing applications, despite an 8% dip last week, applications were still up 26% from a year prior. That’s because the average mortgage interest rate was nearly a quarter point higher last year than it is now. However rates are creeping higher once again, hence the retreat in applications. According to CNBC the average 30-year fixed-rate mortgage rate increased to 4.44% last week from 4.40% the week before, with Marketwatch noting that the annual average for 2019 now sits at 4.33% — down from 2018’s 4.54% average.
Commenting on the impact of these latest figures, MBA’s associate vice president of economic and industry forecasting Joel Kan told CNBC, “With mortgage rates up for the second week in a row, it’s no surprise that refinancings slid 8%, and average loan sizes dropped back closer to normal levels.” Kan went on to note, “The spring buying season continues to be robust.” As for why home purchase applications are up, National Association of Realtors chief economist Danielle Hale attributes the change to “a jump in buyer purchasing power,” serviced by increasing wages.
With spring in the air, the homebuying season is starting to pick up. Even if the mortgage refinancing market is a bit hit or miss these days, the increase in purchase applications (including reaching a multi-year high) is certainly encouraging. That said, with interest rates creeping back up, there is always the chance that some buyers may choose to hold off. Regardless, as Kan suggests, expect home purchases to bloom for the rest of this spring.