Mortgage applications increased more than 5% for the week ending June 15, representing the biggest increase in five months as mortgage rates remained steady.
According to the Mortgage Bankers Association's Weekly Mortgage Applications Survey, applications for home loans jumped 5.1% from the week earlier. According to the trade group, on an unadjusted basis, the index increased 3% compared with the previous week. The Refinance Index was also up, increasing 6%, while the seasonally adjusted Purchase Index rose 4% from the week earlier.
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While refinancing activity had been declining as mortgage rates rose, the Mortgage Bankers Association said that refinancing increased to 36.8% of total mortgage applications for the week ended June 15. That's up from 35.6% in the previous week. Meanwhile, the adjustable-rate mortgage share of activity increased to 7% of all loan applications. During the week ending June 15, the trade group said that the average interest rate for a 30-year fixed-rate mortgage remained unchanged at 4.83% for loan balances of $453,100 or less, while it increased to 4.79% from 4.74% for loan balances of more than $453,100. The rate on FHA-backed 30-year fixed-rate loans decreased to 4.82% from 4.83%.
Since the start of the year, mortgage rates have been all over the place, hitting multi-year highs one week only to come back down for the next week. Take the week ending on June 8 as one example. The Mortgage Bankers Association reported that applications for new homes declined 1.5% that week, and now applications are up 5% for the week ending June 15.
While some buyers, particularly first-time ones, are extremely price sensitive and as a result can't afford an increase in mortgage rates, increasing property values and a dearth of affordable houses to purchase have also been also weighing on applications throughout this year. According to online real estate company Zillow, U.S. home values jumped in April, with the median at $215,600, an 8.7% increase from the same time frame last year.
This marks the fastest increase in home values since June 2006, when the housing market was beginning to slow down from the double-digit growth seen during the housing bubble. Zillow noted that, by September 2007, the median home value had started its descent. This time around, home values have been moving higher since the early part of 2015, when the increase was under 5% year over year. Since the summer of 2015, the values started increasing and have been moving higher ever since, said Zillow.