Mortgage applications, as measured by the Mortgage Bankers Association’s (MBA) index, increased by 7.1% for the week ending March 8, down from 9.7% the week before, according to newly released statistics announced on Wednesday.
Rates for mortgages fell below 7% for the first time in over a month, leading to a significant jump in a key metric of home-purchase applications last week.
According to the numbers, the average interest rate on the widely used 30-year loan also fell to 6.87% last week.
The demand for refinancing also increased last week, climbing 12% over the previous week. Refinancing applications have increased by 5% compared to the prior year.
Earlier this year, as rates rose, housing demand came to a standstill, but as rates have begun to decline, it is roaring back to life. Mortgage applications for house purchases increased by 5% week over week. The number of applications is 11% lower than it was at the same time last year.
Due to the Federal Reserve’s vigorous tightening campaign, the interest rate-sensitive housing market has experienced a quick cooling. In 16 meetings, policymakers tried to slow the economy and kill persistent inflation by raising the benchmark federal funds rate 11 times.
Central bank officials have raised the possibility of interest rate cuts this year, but they have stated that they will wait until they are certain inflation has been well controlled before taking any such action.
With inflation showing no signs of abating, most economists anticipate that cutbacks will start in June.
Demand from consumers has been hit hard by higher mortgage rates, and supply has also been constrained. This is because there are limited options for motivated purchasers, and sellers are hesitant to sell because of the persistence of high mortgage rates, which were locked in before the COVID-19 pandemic.
Current homeowners can also take advantage of lower rates to save money. Home loan refinancing applications were 10% higher than last year and 11% higher than the previous week. Those whose loans have higher rates still feel the effects of the recent decline, even if most current borrowers have rates lower than what is offered today.
