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Mortgage Demand Ticks Up On The Strength Of Purchase Applications

Mortgage demand picked up last week as lower interest rates steered homebuyers back into the market, but activity remains weaker than a year ago because of limited inventory.

Mortgage applications increased by 3.7% during the week ending Feb. 2 on a seasonally adjusted basis, according to the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey.

“​​Rates at these levels have not prompted much of a reaction in the refinance market, as most homeowners have mortgages with much lower rates,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. “However, purchase activity has been strong to start 2024 compared to the final quarter of 2023.”

Purchase applications decreased by 1% from one week earlier on a seasonally adjusted basis, while refinance applications picked up by 12% in the same period. Last week, refis comprised 35.4% of all applications, up from 34.2% the previous week.

Despite swings in Treasury yields, mortgage rates have remained stable since the beginning of the year. The 30-year fixed-rate mortgage averaged 6.63% as of Feb. 1, according to Freddie Mac’s Primary Mortgage Market Survey.

The MBA survey shows the average mortgage rate for 30-year fixed-rate loans with conforming balances ($766,550 or less) increased to 6.80%, up from 6.78% the week before. Meanwhile, rates on jumbo loans (greater than $766,550) decreased to 6.88%, down from 6.94%.

The Federal Housing Administration’s (FHA) share of total applications decreased to 13.1% last week, down from 13.8% the week prior. The U.S. Department of Veterans Affairs (VA) share rose to 14.1%, up from 13.3% the week before. The U.S. Department of Agriculture (USDA) share remained unchanged at 0.4%.

The MBA survey, conducted weekly since 1990, covers more than 75% of all U.S. retail residential mortgage applications. 

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