Mortgage application volume increased last week for the first time in six weeks, according to the Mortgage Bankers Association, despite a rise in interest rates.
Abrupt swings in rates and uncertainty on the overall direction of the housing market are likely at play.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.25% from 6.01%, with points decreasing to 0.71 from 0.76 (including the origination fee) for loans with a 20% down payment.
“Treasury yields continued to climb higher last week in anticipation of the Federal Reserve’s September meeting, where it is expected that they will announce – in their efforts to slow inflation – another sizable short-term rate hike,” said Joel Kan, an MBA economist, in a release.
Applications to refinance a home loan, which are usually very sensitive to big rate swings, actually rose 10% for the week, although they were still 83% lower than the same week one year ago. Part of that may have been due to the holiday adjustment the previous week. It also may have been that the very few borrowers remaining who could benefit from a refinance finally got off the fence, seeing that rates could climb even higher for the foreseeable future.
“The weekly gain in applications, despite higher rates, underscores the overall volatility right now as well as Labor Day-adjusted results the prior week,” Kan said.