Low Mortgage Rates Fuel Spike in Demand

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Over the past few weeks, mortgage rates have been falling, even setting new lows for the year. But despite low interest rates, mortgage activity hadn’t shown much significant improvement. Now, according to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage demand has rebounded, spiking 7.3 percent last week due to a 13 percent jump in refinance activity. The improvement also included a 1 percent increase in demand for loans to purchase homes. Despite last week’s gains, however, purchase demand is still 4 percent below year-before levels. Mortgage rates, on the other hand, were a mixed bag last week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances was up from one week earlier, but rates on jumbo loans and loans backed by the Federal Housing Administration fell. Average mortgage rates on 15-year fixed-rate mortgages also increased. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

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