Mortgage applications rose 2.9% from the previous week as the 30-year fixed rate hit 6.45%
The recent drop in 30-year fixed mortgage rates for the third straight week in late March has resulted in an increase in mortgage applications from homebuyers, according to the Mortgage Bankers Association (MBA). This increase in demand is expected to provide a boost to the housing market as the spring buying season approaches.
The MBA reported a 2.9% rise in mortgage applications on a seasonally adjusted basis for the week ending March 24, with the refinance index rising by 5% compared to the previous week. Meanwhile, purchase mortgage demand also increased by 2% from the prior week, although it remained 35% lower than a year ago.
The decline in mortgage rates was driven by the recent drop in 10-year U.S. Treasury yields, which fell from 4.08% on March 2 to 3.55% on March 28 due to uncertainties about the banking sector’s health after several bank failures. The 30-year fixed rate with conforming loan balances ($726,200 or less) decreased to 6.45% last week, the lowest level in over a month, according to MBA data. Mortgage rates on jumbo loans (greater than $726,200) also fell to 6.27% from 6.30% in the same period.
While lower cost of capital is likely to bring buyers back into the market in a meaningful way, the latest market instability and the Federal Reserve’s federal funds rate hike could stress real estate agents, mortgage advisors, and lenders to the core. Loan officer Daniel Arias at We Fund LA, a division of New American Funding, noted that his pre-approval applications for March are in line with January’s numbers, but he has not seen the busy spring buying season that everyone had hoped for.
Despite these concerns, MBA’s Joel Kan believes that the recent uptick in purchase applications and home sales is a welcome development that could help offset the decline in sales from last year. New home sales also increased in February for the third straight month, rising to a seasonally adjusted annual pace of 640,000 homes, although sales were still down 19% compared to a year ago.
The housing market remains unpredictable, and it’s difficult to predict how the spring buying season will play out. However, the recent increase in mortgage applications and home sales could provide a much-needed boost to the market after a tough year. As always, buyers and sellers should keep a close eye on the market and work closely with their real estate agents and lenders to navigate the current environment.
