Mortgage interest rates remain historically low, and demand remains high, but slight dips in mortgage applications to purchase a home may show a change in first-time buyer demand. Total mortgage application volume fell by 0.8% last week compared to the previous week, and mortgage applications were 2% lower, according to CNBC. This could be a result of the increasing average rate for FHA-backed 30-year fixed-rate mortgages, which grew by 0.14%. CNBC says these federally backed loans are most popular with first-time buyers because of the lower down payments required. Buyers with FHA loans made up 35% of closings in June—will the increasing rates threaten the housing market’s recovery?
Mortgage applications to purchase a home were 2% lower last week than the previous week but a strong 21% higher annually. Homebuyers are making up for lost time last spring and appear to have a new urgency to move due to the Covid-19 pandemic. Buyer demand for new construction is especially strong, as the supply of existing homes for sale continues to shrink.
Applications to refinance a home loan were basically flat, falling 0.4% for the week but were 121% higher than a year ago. Refinance demand has been riding high because mortgage rates keep falling. Even small rate moves open the field to more borrowers who can benefit and save much-needed cash on their monthly payments.