Mortgage applications inch up for the first time in five weeks

Abstract

Mortgage applications inched up last week for the first time since June 24. Total mortgage demand increased 1.2% as the average 30-year fixed mortgage rate made the largest weekly drop since 2020. Applications to refinance a home rose 2%, according to the Mortgage Bankers Association, but the annual drop was still huge, down 82% since last year. The slight increases came as mortgage rates dropped 0.31 percentage point from 5.74% to 5.43% following the Federal Reserve announcement of its latest rate hike and the GDP report, which showed the U.S. economy contracted for the second straight quarter. "Mortgage rates declined last week following another announcement of tighter monetary policy from the Federal Reserve, with the likelihood of more rate hikes to come. Treasury yields dropped as a result, as investors continue to expect a weaker macroeconomic environment in the coming months," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "Lower mortgage rates, combined with signs of more inventory coming to the market, could lead to a rebound in purchase activity," he said. For the first time since 2020, the share of prospective buyers who expect the home search to get easier in the months ahead rose, also increasing 5 percentage points to 22%. Housing availability expectations rose in all regions except the Midwest.