Both purchase loan and refinance applications increased w/w. Rising interest rates could be the stimulus.

Rising Mortgage Rates Could Be Motivating Potential Buyers & Refinancers to Act

In its most recent weekly survey of lenders, the Mortgage Bankers Association (MBA) found that applications for purchase loans climbed +5% w/w and applications by homeowners to refinance their existing mortgages rose +0.4%.

Joel Kan, an MBA forecaster, said, “The financial markets continue to discern the Federal Reserve’s policy path in the coming months in light of the current high grow, high inflation environment.  Despite the increase in rates, refinance applications rose slightly, driven by a 22% gain in conventional refinances.  Borrowers continue to lock in mortgages in anticipation of higher rates in the future.”

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Worries about Inflation Are Spurring Buyers to Buy and Refinancers to Refinance

Forecasters have varying views about how quickly mortgage rates will climb in light of the Federal Reserve’s announced plans to taper its support for mortgage markets.

Fannie Mae economists believe financial markets have already “baked in” their expectations that rates will gradually increase over the next several years.  Fannie expects 30-year mortgage rates climbing to 3.4% by the end of 2022 and leveling off to 3.5% during the last nine months of 2023.

The MBA economists are expecting inflation to be more long-lasting and therefore are predicting rates on 30-year fixed mortgages to hit 4.3% by the second half of 2023.

MBA Summary of Average Rates for Week Ending November 19

  • 30-year fixed-rate conforming mortgages (loan balances of $548,250 or less) rates averaged 3.24%, up from 3.20% the week before. The effective rate, including origination fees, came to 3.35%, also an increase from the week prior.
  • 30-year fixed-rate jumbo mortgages (loan balances greater than $548,250) averaged 3.28%, up from 3.26% the week before. The effective rate including points decreased from the week before to 3.35%.
  • 30-year fixed-rate FHA mortgages had rates averaging at 3.227%, up from 3.23% the week before. The effective rate including points increased to 3.37%.
  • Rates for 15-year fixed-rate mortgages averaged 2.59%, up from 2.56% the week prior. The effective rate increased to 2.68%.
  • For 5/1 adjustable-rate mortgage (ARM) loans, rates averaged 3.00%, up from 2.89% the week before. The effective rat4 incras4d to 3.11%.

Thanks to the Mortgage Bankers Association and Inman.

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