Lenders are still not seeing a slowdown in volume of mortgage application, despite the fact that rates are rising.
Last week, mortgage application volume rose 4 percent from the previous week. The Mortgage Bankers Association (MBA) included an adjustment for Martin Luther King Day.
Overall volume compared to last year still continues to lag by 18 percent. The lag is due to the fall in refinances since rates went up after the presidential election. However, refinance volume did move up slightly higher again last week, by 0.2 percent seasonally adjusted.
Volume jumped sharply the previous week after outgoing HUD Secretary Julian Castro announced there would be a quarter-point drop in the FHA’s annual mortgage premium. However, one of the first acts of the Trump administration was to reverse the move. The move was reversed almost immediately following Trump’s inauguration speech.
FHA total applications increased from 13.1 percent the previous week to 13.6 percent, but it is likely that the applications will fall back again next week.
The average 30-year fixed rate with conforming loan balances increased to 4.35 percent.
“While this was the first rate increase in January, rates remain about 10 basis points lower than four weeks ago,” said Lynn Fisher, MBA vice president of research and economics.
Purchase applications were less sensitive to the FHA announcement. They still continued to increase last week by 6 percent, but that still leaves them just 0.1 percent higher than one year ago. Home listings dropped in December to an 18-year low, according to the National Association of Realtors. More home are expected to come on the market in the spring season, but the demand is still expected to be far more than the supply. In addition to low supply, all of the well-priced homes will go quickly.
“Although it is still early in the home buying season, purchase activity remains on par with a year ago, suggesting that recent wage growth of nearly 3 percent is helping to offset the increase in interest rates. This trend is also consistent with other reports of home buying activity,” said Fisher.
Mortgage rates continue to go back and forth. They have taken big jumps and then continued to fall back down again. However, this is not the case with the price of homes. Home prices have continued to increase and do not seem to be going back down. The price of homes continues to rise above income and inflation.