Unusual Whales

U.S. mortgage demand jumps 10% as rates fall across the board

Unusual Whales -

U.S. mortgage demand jumps 10% as rates fall across the board, per MW.


A decline in rates has fueled increased demand for home buying and refinancing, as indicated by the Mortgage Bankers Association (MBA). The overall market composite index, serving as a gauge for mortgage application volume, witnessed a 10.4% rise to 210.5 in the week ending January 12 compared to the previous week. For reference, the index measured 239.2 a year ago.

Key details from the report reveal that the purchase index, measuring mortgage applications for home purchases, increased by 9.2% from the previous week. Concurrently, the refinance index saw a 10.8% increase, primarily driven by refinancing conventional mortgages.

In terms of average contract rates, the 30-year mortgage for homes sold for $726,200 or less displayed a rate of 6.75% for the week ending January 12, a slight decrease from the 6.81% reported the week before. For jumbo loans, representing 30-year mortgages for homes sold for over $726,200, the rate decreased from 6.98% to 6.86% compared to the previous week.

Other mortgage rates included a 6.46% average rate for a 30-year mortgage backed by the Federal Housing Administration, a rise in the 15-year mortgage rate from 6.41% to 6.24%, and an increase in adjustable-rate mortgage rates from 6.17% to 6.14% over the past week.

In the broader context, the housing market is experiencing increased activity as rates decrease. Lower rates are not only enticing buyers but are also attracting homeowners with existing low interest rates who might have otherwise been hesitant to sell.

If the economy weakens further and rates continue to decline, the disparity between housing demand and supply may become more balanced. However, currently, demand exceeds supply, putting upward pressure on home prices.

Joel Kan, Vice President and Deputy Chief Economist at the MBA, acknowledged that while purchase activity lags behind year-ago levels, refinance applications have improved from their recent low point, showing year-over-year gains, albeit at relatively low levels. Kan expressed cautious optimism that if rates continue to ease, home purchases may see an uptick in the coming months.