New homes and better rates continue to lure buyers back
Mortgage applications dipped slightly last week, but more homebuyers seem to be entering the market, the Mortgage Bankers Association (MBA) reported.
MBA’s latest Weekly Applications Survey, covering the week ending September 27, showed a 1.3% drop in overall mortgage application volume compared to the previous week. On an unadjusted basis, applications were down 1%.
“Last week’s incoming data showed an economy that is still growing at a solid pace, even as inflation continues to decline.” Said MBA chief economist Mike Fratantoni.
As a result, the average contract interest rate for 30-year fixed-rate mortgages inched up to 6.14% week over week.
“With this move, refinance application volume declined on the week but remains almost three-times as high as last year’s pace,” Fratantoni added.
The refinance index fell by 3% from the previous week but remains 186% higher than the same week in 2023. Meanwhile, purchase applications saw a 1% increase both on a seasonally adjusted and unadjusted basis, with the latter being 9% higher than the same period last year.
“The news for the week was that more homebuyers appear to be entering the market,” Fratantoni said. “Purchase application activity was up for the week and increased more than 9% compared to last year at this time.
“Inventories of both new and existing homes have been increasing over the course of 2024, meaning that potential buyers have properties to look at and now have somewhat lower mortgage rates leading to better affordability.”
Read more: Housing affordability improves, boosting homebuyer prospects
The report also noted other changes in mortgage activity. The refinance share of activity dipped to 54.9% from 55.7%, while adjustable-rate mortgages (ARMs) accounted for 5.8% of applications, down from the previous week. The FHA share of total applications rose to 16.6%, up from 15.0%, while the VA share fell to 15.4% from 18.3%. The USDA share of total applications edged up one basis point to 0.4%.
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