Weekly mortgage demand in the U.S. jumped 11% last week, defying persistent economic concerns and minor interest rate changes, according to the Mortgage Bankers Association (MBA).
Mortgage Rates Drop Slightly as Borrowing Surges
The average interest rate for 30-year fixed-rate mortgages with balances of $806,500 or less dipped to 6.84% from 6.89%, even as the accompanying points rose to 0.68 from 0.67. While modest, the rate shift was accompanied by a notable increase in mortgage applications, particularly for conventional loans, the MBA reported.
Conventional Loan Demand Shows Resilience
Michael Fratantoni, MBA’s chief economist, cited a combination of weak GDP growth and a contracting manufacturing sector as downward pressures on rates, even as April’s job report remained strong. “The net impact on mortgage rates was mostly downward but just back to levels from early April,” he noted.
Applications for home purchases rose 11% week-over-week and were 13% higher than the same period last year, driven by strong demand for conventional loans. “It’s a surprisingly strong move given lingering economic uncertainty,” Fratantoni said, attributing the rise to move-up buyers with larger loan sizes.
Refinancing Also Rebounds on VA Loan Demand
Refinancing activity mirrored purchase demand, also rising 11% from the previous week and surging 51% year-over-year. The increase was led by Veterans Affairs (VA) loans, which saw a 26% jump in applications.
Fed Decision Looms Over Future Rate Movements
While mortgage rates have remained steady so far this week, they could shift following Wednesday’s Federal Reserve meeting. Although a rate cut is not expected, comments from Fed Chair Jerome Powell may influence broader market sentiment and mortgage rates accordingly.
Will cautious buyers return to the market if rates remain stable—or will broader economic jitters continue to hold them back?
