Mortgage Demand Sees Slight Increase, Led by Refinance Applications

Mortgage demand experienced a slight uptick for the first time in four weeks, primarily driven by a modest increase in refinance applications. However, this upward trend may not be sustainable.

Mortgage applications rose by 0.1% on a seasonally adjusted basis during the week ending April 5, according to the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey.

Factors Influencing Mortgage Rates

Joel Kan, MBA’s vice president and deputy chief economist, attributed the increase in mortgage rates to several factors. Federal Reserve officials have maintained a patient stance on rate cuts, influenced by stubbornly high inflation rates and the overall resilience of the economy. Additionally, strong employment data released recently has further pushed rates higher.

The 30-year fixed rate rose to 7.01%, the highest in over a month. Purchase applications decreased by almost five%, reaching the lowest level since the end of February, while refinance applications increased by 10%, particularly driven by VA refinance applications.

Mortgage Rate Trends

The average mortgage rate for 30-year fixed loans with conforming balances ($766,550 or less) increased to 7.01%, up from 6.91% the previous week. Rates on jumbo loans (balances greater than $766,550) also rose week over week to 7.13%, up from 7.06%.

As of April 10, the 30-year fixed rate on HousingWire’s Mortgage Rates Center stood at 7.17%. Treasury spreads widened on Wednesday due to hotter-than-expected inflation in March, prompting loan originators to expect further rate increases.

Conclusion

While mortgage demand saw a slight increase, driven mainly by refinance applications, the broader trend remains uncertain. Mortgage rates have risen, influenced by various economic factors and Fed policy, indicating a potentially challenging environment for homebuyers and refinancers in the near term.