Applications for purchase loans jumped 12 percent week over week and 52 percent from a year ago, according to a weekly survey of lenders by the Mortgage Bankers Association.
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A slight pullback in mortgage rates generated a surge of loan applications from would-be homebuyers but did little to heighten interest in refinancing, according to a weekly survey of lenders by the Mortgage Bankers Association.
Applications for purchase loans were up by a seasonally adjusted 12 percent last week when compared to the week before, and 52 percent from a year ago, the MBA’s Weekly Mortgage Applications Survey showed.
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Requests to refinance were down 3 percent week over week, but up 119 percent from a year ago, when mortgage rates were still near post-pandemic highs, the survey found.
Joel Kan
“Purchase activity drove overall applications higher last week, as conventional purchase applications picked up pace and mortgage rates declined for the first time in over two months, with the 30-year fixed rate dropping slightly to 6.86 percent,” MBA Deputy Chief Economist Joel Kan said in a statement. “With the growth in for-sale inventory and signs that the economy remains strong, buyers have remained in the market even though rates have increased recently.”
Rates for 30-year fixed-rate conforming mortgages averaged 6.86 percent last week, down from 6.90 percent the week before, the MBA survey found.
Since hitting a 2024 low of 6.03 percent on Sept. 17, rates for 30-year fixed-rate conforming mortgages have been climbing back toward 7 percent, averaging 6.74 percent Tuesday, according to rate lock data tracked by Optimal Blue.
Mortgage rates rebound
That’s well short of the 2024 high of 7.27 percent registered on April 25 and the post-pandemic high of 7.83 percent reached in October, 2023.
But bond market investors are demanding higher yields on government debt and mortgage-backed securities due to strong consumer spending and hotter inflation data that signal the economy remains on strong footing, Fannie Mae economists said in their latest housing forecast.
While many economists still think mortgage rates have peaked, it remains to be seen whether policies like tariffs, tax cuts and mass deportations touted by the incoming Trump administration will be inflationary.
In their latest forecasts, Fannie Mae and MBA economists said they expect rates to come down over the next two years, but only gradually.
Gradual decline in rates foreseen
Source: November, 2024 forecasts by Fannie Mae and the Mortgage Bankers Association.
In October, Fannie Mae economists were predicting that rates on 30-year fixed-rate mortgages would fall to 6 percent by the end of this year to 5.6 percent by the end of next year.
In a Nov. 13 forecast, economists with Fannie Mae’s Economic and Strategic Research (ESR) Group predicted mortgage rates will be closer to 7 percent at the end of this year, and remain above 6 percent in 2025 and 2026.
Economists at the Mortgage Bankers Association (MBA) are charting out a similar path for rates in the years ahead, predicting rates on 30-year fixed-rate mortgages will still be at 6.4 percent at the end of next year and average 6.3 percent in 2026.
In a Nov. 8 forecast, National Association of Realtors Economist Lawrence Yun said mortgage rates could fall next year if policies implemented by the incoming Trump administration boost home construction and bring more people back to the workforce.
Yun forecasts that sales of existing homes will grow by 9 percent next year and by 13 percent in 2026 if mortgage rates remain near 6 percent and employers add 2 million jobs a year.
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