The refinance index increased 9.4% from the week prior, and the seasonally adjusted purchase index was 6.6% higher in the same period. In addition, adjustable-rate mortgages rose 13.9% and government loans were up 13% last week, according to the MBA estimates.
According to the MBA, part of the increase was a result of the calendar.
“Even with higher rates, there was an uptick in applications last week, but this was in comparison to two weeks of declines to very low levels, including a holiday week,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.
“Comparing the application indices from a year ago, purchase applications were still down 42%, and refinance activity was down 76%. Many borrowers are waiting on the sidelines for rates to come back down.”
Who is jumping into the market?
Investor demand tends to increase at times when most borrowers are waiting for rates to decline, Justin Fullmer, area manager in Idaho for Future Mortgage, told HousingWire.
“We’re seeing a lot more investors enter the market to secure a better deal while competition is low,” Fullmer said.
The demand, according to Fullmer, also increased because some borrowers realized that “eventually, when rates drop, it will go back to a seller’s market, and buyers will lose the massive credits and other conditions that they can negotiate now.”
At Future Mortgage, loan officers are still locking loans at mortgage rates in the high 5s to 6s for owner-occupied loans — with the help of sellers’ credits in most cases.
The MBA survey shows that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) was 6.79% last week, the highest level since November 2022, up from the previous week’s 6.71%.
Rates for jumbo loan balances (greater than $726,200) went from 6.44% to 6.49% in the same period.
But another index measures rates even higher. According to Mortgage News Daily, the average 30-year fixed rate mortgage on Wednesday afternoon was 7.01%.
“I anticipate that as interest rates hopefully decline throughout 2023, there will be a surge in active buyers, leading to increased competition in the market,” Fullmer said. “I believe we’re hitting a peak in rates now, and we’re hoping for rates in the low 5’s by the end of 2023.”