Despite interest rates reaching record highs, the latest data from the Mortgage Bankers Association (MBA) reveals that mortgage application volumes experienced a growth spurt for the first time in five weeks. This surprising uptick in applications suggests that potential homebuyers and homeowners looking to refinance are still active in the market, perhaps driven by factors such as favorable economic conditions, pent-up demand, or specific regional trends. This resilience in the face of elevated interest rates underscores the continued strength and adaptability of the housing market.
The Market Composite Index from MBA saw a modest increase of 2.3% compared to the prior week when the 30-year fixed-rate mortgage stood at 7.31%, marking its highest point since December 2000. Both refinance and purchase application volumes showed signs of recovery, with refinance applications rising by 3% and purchase applications by 2%.
Joel Kan, MBA’s deputy chief economist, stated in a press release that Treasury yields reached their highest point early in the week but eventually decreased towards the end, possibly prompting some level of market activity. Mortgage applications for both home purchases and refinances saw an uptick after five weeks of decline, although they remained relatively low. Purchase applications increased but remained 27% below the levels seen a year ago. This decline is attributed to the persistent influence of elevated mortgage rates and limited housing inventory, which continue to constrain the housing market.
Among all loan applications, the portion devoted to refinancing increased by six basis points, reaching 30.1%, while the volume of adjustable-rate mortgage (ARM) applications declined, accounting for only 7.5% of the overall application activity.
Despite the recent increase driven by a 7.9% surge in conventional refinances, the refinance market remains sluggish, with government refinance applications declining by over 10% last week, as noted by Kan.