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Mortgage Demand Surges Despite Stubbornly Elevated Rates
March 6, 2024
The housing market may be coming out of hibernation early and kicking off the spring homebuying season, despite stubbornly high mortgage rates.
Mortgage applications to purchase a home jumped 11% last week from the week prior, according to the Mortgage Banker’s Association’s (MBA) seasonally adjusted index.
Still, even with the jump, mortgage demand for the week was 8% lower than during the same week last year.
The impact of higher mortgage rates continues to weigh on the housing market, and prospective buyers got only marginal help on that front. The average rate for a 30-year fixed-rate mortgage decreased slightly to 6.88% last week, down from 6.94% the week before, according to Freddie Mac.
Mortgage rates have floated between 6% and 7% for much of the year, and are largely in the same place they were a year ago. Mortgage rates accelerated to a 20-year high above 8% in the latter part of last year, but have retreated modestly.
An economist from the MBA noted that while the retreat in mortgage rates had been “relatively small,” the increase in purchase mortgage volume shows how sensitive first-time homebuyers can be to rate changes.
As mortgage rates have remained largely unchanged, the sudden surge in buying activity may have more to do with increasing inventory, which has been a major hindrance for prospective buyers.
There were 14.8% more homes actively for sale in February as compared with a year earlier, according to data from Realtor.com. In a promising sign for entry-level buyers, the number of homes in February listed for sale with asking prices between $200,000 and $350,000 jumped by 25% from last year, outpacing the growth of all other price categories.
