Mortgage demand has reached its highest point in three weeks, according to the latest survey from the Mortgage Bankers Association (MBA). The uptick is a direct response to the first decline in mortgage rates since March.
By the numbers:
- The MBA’s mortgage market index rose to 197.1 in the week ending May 3, a 2.6% increase from last week.
- Purchase demand increased by 1.8% from the prior week — the first increase in three weeks.
- Refinance demand jumped 4.5% from the prior week, pushing the refinance share of total mortgage activity to 30.6%.
Why it matters: Lower mortgage rates are rekindling interest among homebuyers and homeowners looking to refinance. The average contract interest rate for a 30-year fixed-rate mortgage dropped to 7.18%, down 11 basis points.
Zoom in: Mike Fratantoni, MBA’s Chief Economist, highlighted the significant role of FHA applications, which surged by 5%. “This is a sign that first-time homebuyers are actively participating in the market,” he said.
Be smart: While the rise in mortgage applications signals a potential resurgence in the housing market, the sustainability of this trend hinges on the trajectory of interest rates in the coming months.
What’s next: The market’s response to fluctuating interest rates will be crucial for understanding future homeownership affordability and refinancing viability.