Mortgage Demand Rebounds as Rates Dip Slightly, Sparking Renewed Homebuyer Interest

Mortgage demand continues to rebound as rates move slightly lower, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.35% from 6.42%, with points falling to 0.61 from 0.62 for loans with a 20% down payment.

Total mortgage application volume rose 7.9% last week compared with the previous week, driven by a 10% increase in applications for a mortgage to purchase a home.

Purchase applications were 14% higher than the same week one year ago, reversing a brief period when buyer demand had sunk below year-ago levels.

The increase was led by conventional purchase loans, which rose 11% over the week.

Mortgage rates declined last week as financial markets responded positively to the Middle East ceasefire and the lower trend in oil prices, according to Mike Fratantoni, MBA senior vice president and chief economist.

Despite geopolitical uncertainty, housing demand is being supported by a still resilient job market, and homebuyers are experiencing a buyer’s market in most of the country given the higher levels of inventory relative to last year.

Fr antoni noted that the spring housing market had been looking like a letdown but now appears to have new life.