Mortgage application to buy homes rebounded after a two-month slump.
Applications for purchase loans rose 4 percent, seasonally adjusted, last week, according to the Mortgage Bankers Association’s index.
The increase put an end to the “recent slump” that gripped the purchase market over the past seven weeks, said Joel Kan, MBA’s head of industry forecasting.
The jump in purchase applications comes as home prices are increasing at record rates after months of strong sales.
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Homebuying slump worsens as applications for mortgage loans drop
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Homebuyers retreat while mortgage refinancings jump
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US home prices jump at record rate
Refinancing activity saw a drop off, however. MBA’s index tracking refinance applications fell by 2 percent last week compared to the previous week’s survey. Though the refinance index was still up 98 percent yearover year, Kan noted that the combination of small refinance balances and lessened demand could indicate less activity going forward.
“The average refinance loan balance of $291,000 last week was the lowest since January,” he said in a statement. “Many borrowers with higher loan balances may have acted earlier on in the current refinance wave.”
Tightening lending criteria could further exacerbate the situation. Mortgage credit supply, which reflects the accessibility of mortgage financing, hit a six-year low in September, according to MBA. Nationally, borrowers with lower incomes or poor credit history are increasingly unable to take advantage of low mortgage rates.
The decline in refinancing applications, which accounts for about 70 percent of MBA’s survey of all home loans, limited the overall index to 0.3 percent in weekly growth. MBA’s survey has been running weekly since 1990 and covers about 75 percent of the mortgage market.
The average 30-year, fixed-rate mortgage rate ticked up to 2.99 percent from 2.98 percent the week prior. For jumbo loans, the average rate dropped two basis points to 3.11 percent from 3.13 percent.