[ad_1]
A home in a condominium project was built on June 21, 2023 in Lemont, Illinois.
Scott Olson | Getty Images
Mortgage rates turned higher again last week. But the increase did not reduce mortgage demand, as buyers sought newly built homes.
Total mortgage application volume increased 3% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. An additional adjustment was made for the Juneteenth holiday.
Mortgage applications for a home purchase rose 3% for the week but fell 21% year over year. Those applications increased for three consecutive weeks to the highest level since early May, despite still-high mortgage rates.
“New home sales have fueled an increase in buying activity in recent months as buyers seek options beyond the existing home market,” Joel Kahn, vice president of MBA and deputy chief economist, said in a statement. “Existing home sales have continued to decline due to a lack of inventory to sell as many would-be sellers are holding onto their lower-priced mortgages.”
Newly built home sales in May were up 12% over April and were 20% higher than in May 2022, According to a report Tuesday from the US Census. Builders drive demand in part by offering incentives, such as paying off mortgage rates.
Last week, the average contract interest rate for 30-year fixed-rate mortgages with matching loan balances ($726,200 or less) rose to 6.75% from 6.73%, with points remaining at 0.64 (including origination fees) for loans. 20% low premium. The average rate for 30-year fixed-rate mortgages with massive loan balances (greater than $726,200) rose more sharply to 6.91% from 6.80%.
“The spread between the jumbo rate and the matching rate widened to 16 basis points, marking the third consecutive week that the jumbo rate is above the matching rate,” Kahn said. “To put this in perspective, from May 2022 to May 2023, the jumbo rate averaged about 30 basis points below the matching rate.”
The widening of the spread and the increase in the jumbo interest rate stem from the recent failures of the regional banks. Lenders keep huge loans on their balance sheets, because Fannie Mae and Freddie Mac don’t buy loans that big. Bank credit, especially in community banks, has been significantly tightened, which has led to higher interest rates.
Home loan refinance applications were up 3% for the week but were 32% lower than the same week a year ago. The vast majority of borrowers today have mortgages with interest rates of less than 4%.
[ad_2]
