Mortgage purchase applications continued to climb last week, thanks to a steadying of rates.
Purchases rose 4 percent on a seasonally adjusted basis from the previous period in the week ending Dec. 9, according to the Mortgage Bankers Association. Purchase applications were still 38 percent below the mark from the previous year.
Overall, mortgage activity rose 3.2 percent from the previous week. In addition to the gain in purchases, the refinance index also jumped 3 percent as the environment improved for owners who likely locked down on lesser mortgage rates before and had little incentive to refinance their mortgages.
Rates largely held steady from the previous week and remain near the lowest mark in a month. The average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances inched up from 6.41 percent to 6.42 percent, while points increased from 0.63 to 0.64.
At the end of October, mortgage rates hit 7.16 percent.
Recent mortgage rate drops and holds could portend good things for prospective homebuyers, according to MBA deputy chief economist Joel Kan.
“The ongoing moderation in home-price growth, along with further declines in mortgage rates, may encourage more buyers to return to the market in the coming months,” Kan stated.
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The VA share of total applications increased from 11.4 percent to 11.5 percent, while the USDA share remained at 0.6 percent. The FHA share, meanwhile, decreased from 13.7 percent to 13.1 percent.
The average contract interest rate for a 30-year, fixed-rate mortgage with a jumbo loan balance — greater than $647,200 — increased slightly to 6.14 percent. The average contract interest rate for a 15-year, fixed-rate mortgage also increased to 5.92 percent.
The stabilization of mortgage rates is good news for buyers, who have been sidelined for much of the year by rising rates and elevated home prices. Rates hovered near historic lows at the beginning of the year, but began surging in the spring when the Federal Reserve took decisive action to raise interest rates to try and tame inflation.
The Fed is in focus once again on Wednesday as it makes another policy decision amid cooling inflation numbers. The agency is projected to hike interest rates by half a percentage point, according to Bloomberg, rather than the 0.75 percentage point hikes that have become commonplace in recent months.