Mortgage applications increase despite high rates
Loan applications for new home purchases in August increased 4% from the previous month despite the high mortgage rates subduing overall borrower demand.
According to the Mortgage Bankers Association, strong purchase demand fuelled mortgage applications for newly constructed homes by 4% month over month and 20.6% year over year.
“Despite the 30-year fixed rate averaging over 7% in August, applications for new home purchase loans increased over the month and from a year ago,” MBA deputy chief economist Joel Kan said in the report.
Kan said the robust demand was driven by a shortage in existing for-sale inventory as most homeowners are “locked into lower mortgage rates and unwilling to give those rates up in this higher rate market.”
The latest Census Bureau report showed that new home sales were at an annualized rate of 714,000 in July. MBA expects that figure to drop slightly to 702,000 units for the August reading.
Total loan applications comprised 65.8% conventional loans, 23.8% FHA loans, 0.2% RHS/USDA loans, and 10.2% VA loans. The average loan size for new homes rose from $397,148 in July to $398,092 in August.
“The FHA share of applications dipped slightly in August but remains close to survey highs, indicating that a larger share of first-time homebuyers is supporting the new home sales market,” Kan added. “Our estimate of new home sales showed a 4% increase to the strongest pace of sales in three months at 702,000 units.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
