The ongoing decline in mortgage rates helped send home loan applications higher last week, in what Mortgage Bankers Association (MBA) deputy chief economist Joel Kan called “a step in the right direction.”
The MBA’s Market Composite Index measuring mortgage application volume was up 7.4% from the previous week. Refinancing applications, which are especially impacted by borrowing costs, soared 18%. Applications to purchase a home rose 3%, according to the MBA's latest weekly survey.
The average rate on a fixed-rate, 30-year conforming home loan (up to $726,200) fell to 6.18% from 6.19%, the fifth consecutive weekly decline and the lowest it’s been in five months.
Kan said purchase activity that was “put on hold last year due to the quick runup in rates is gradually coming back as rates ease and demand remains strong.”
However, he pointed out that the average loan size for a home purchase increased to $428,500, the most since May. He noted that was an indication the homes being sold are in the higher price range with less first-time homebuyer activity, as “entry level housing remains undersupplied, and buyers struggle with affordability in many markets.”