Homebuying season is nearly here and the demand for mortgages is accelerating.
An index tracking the applications to purchase homes increased 7 percent, seasonally adjusted, last week compared to the prior week, according to the Mortgage Bankers Association.
MBA’s weekly metric, known as the purchase index, presages the seasonal uptick the housing market sees every spring, according to Joel Kan, head of industry forecasting for the association.
“With the spring buying season at the doorstep, the purchase market had its strongest
showing in four weeks,” he said in a statement.
The MBA index tracking refinance applications went the other way, dropping 5 percent from the prior week, which Kan attributed to rising mortgage rates.
The average rate for a 30-year, fixed-rate mortgage was 3.26 percent last week, the highest since July 2020 and up 40 basis points since the beginning of the year. Last week’s rate was up only 3 basis points from the week prior, however. Jumbo rates also increased marginally, to 3.34 percent from 3.33 percent.
“Signs of faster economic growth, an improving job market and increased vaccine distribution are pushing rates higher,” said Kan, explaining that the run-up in mortgage rates is cooling the demand for refinance applications. “[Refinance] activity declined last week for the fourth time in five weeks.”
For the second week in a row, the average loan size on purchase applications dropped. Last week the average request for a loan to buy a home was $409,900, down from $412,300 the previous week. It comes after weeks’ of gains.
MBA’s indices survey 7 percent of the residential mortgage market on a weekly basis. Its report has been running since 1990.