Demand for mortgages rose for the second week in a row, despite some volatility in mortgage rates.
Total demand volume rose 6.5% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contractual interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) fell from 6.79% to 6.71%, with points rising from 0.80 at 0.79 (including origination fees) for loans with a 20% decline. payment.
That was average, but mortgage rates were significantly higher for most of the week before dropping sharply on Friday after news broke of Silicon Valley Bank.
Despite higher rates, mortgage applications for buying a home rose 7% for the week, but were still 38% lower than the same week a year ago. Home buying was virtually flat in early February after rates rose about a full percentage point, but they seem to be coming back now, perhaps because buyers fear rates will rise even further. The question is how long will this last?
“It always happens when rates go up and it only lasts for a few weeks,” said John Burns of John Burns Real Estate Consulting, who said he saw February sales of new homes increase despite higher rates.
Lennar, the nation’s second-largest homebuilder, posted earnings that beat expectations on Tuesday, with company chairman Stuart Miller saying in the statement:
“Buyers are eyeing the possibility that the current interest rate environment will be the new normal. As a result, the housing market continues to evolve as growing household and family formation continues to drive demand in the face of a chronic shortage of supply.”
Home loan refinance applications were up 5% from the previous week, but were 74% lower than a year ago.
Mortgage rates fell further on Monday, according to a separate Mortgage News Daily survey, but rebounded again on Tuesday following the release of February’s consumer price index, suggesting the Federal Reserve could raise interest rates again. interest next week despite the recent turmoil in the banking sector.