Demand for Purchase Mortgages Climbs for 3rd Week in a Row

Key Takeaways:

– Inman Connect New York is happening this week, offering an opportunity to experience the real estate industry firsthand.
– Demand for purchase mortgages has increased for the third consecutive week, driven by homebuyers taking advantage of lower rates.
– Refinance applications have decreased due to the lack of incentives for homeowners to refinance at current rates.
– Mortgage rates have stabilized and are expected to continue to decrease throughout the year.
– There is optimism that the real estate market will see more listings this spring as homeowners are no longer locked into higher rates.
– The Federal Reserve is predicted to cut rates in March, according to futures markets.
– Average rates for different types of loans have increased slightly compared to the previous week.


Inman Connect New York is LIVE this week! Experience the pulse of the real estate industry in person or join us from anywhere in the world — the future of real estate is unfolding now. Get your virtual ticket here.

Demand for purchase mortgages picked up for the third week in a row last week as some homebuyers seeking to take advantage of the recent decline in rates got an early jump on the spring homebuying season, according to a weekly survey of lenders by the Mortgage Bankers Association (MBA).

The MBA’s Weekly Mortgage Applications Survey showed applications for purchase loans were up by a seasonally adjusted 8 percent last week compared to the week before, but down 18 percent from a year ago. With mortgage rates no longer in free fall, applications to refinance were down 16 percent week over week, and 8 percent from a year ago.

Joel Kan

“Mortgage rates increased slightly last week, but there continues to be an upward trend in purchase activity. Conventional and FHA purchase applications drove most of the increase last week as some buyers moved to act early this season,” MBA Deputy Chief Economist Joel Kan said, in a statement. “Refinance applications declined over the week and remained at low levels. There is still little incentive for homeowners to refinance with rates at these levels.”

The MBA’s weekly lender surveys show demand for purchase loans has picked up on a weekly basis every week this year, surging 9 percent during the week ending Jan. 12 and 6 percent during the week ending Jan. 5.

Mortgage rates stabilize

At 6.69 percent Tuesday, rates on 30-year fixed-rate conforming mortgages were within a quarter of a percentage point of a recent low of 6.56 percent registered on Dec. 27. That’s a full percentage point lower than the 2023 peak of 7.83 percent registered Oct. 25, according to loan lock data collected by Optimal Blue.

In a forecast published last week, Fannie Mae economists said they no longer expect a recession in 2024, but are optimistic that mortgage rates have additional room to come down below 6 percent by the end of the year.

A record number of consumers surveyed by Fannie Mae in December said they expect mortgage rates will keep falling this year, a shift in expectations that could free homeowners from the so-called “lock-in effect” and generate more listings this spring.

The CME FedWatch Tool, which tracks futures markets to calculate the probability of the Fed’s next moves, shows investors on Wednesday were are pricing in a 53 percent chance that the Fed starts cutting rates on March 20. In December, futures markets were predicting an 88 percent chance of a March rate cut.

For the week ending Jan. 19, the MBA reported average rates for the following types of loans:

  • For 30-year fixed-rate conforming mortgages (loan balances of $766,550 or less), rates averaged 6.78 percent, up from 6.75 percent the week before. With points increasing to 0.63 from 0.62 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, the effective rate also increased.
  • Rates for 30-year fixed-rate jumbo mortgages (loan balances greater than $766,550) averaged 6.94 percent, up from 6.86 percent the week before. With points increasing to 0.46 from 0.42 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
  • For 30-year fixed-rate FHA mortgages, rates averaged 6.51 percent, up from 6.46 percent the week before. With points increasing to 0.87 from 0.80 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
  • Rates for 15-year fixed-rate mortgages averaged 6.31 percent, up from 6.24 percent the week before. With points unchanged at 0.59 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
  • For 5/1 adjustable-rate mortgages (ARMs), rates averaged 6.22 percent, up from 6.14 percent the week before. Although points decreased to 0.49 from 0.68 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.

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