Despite rising interest rates, mortgage-rate applications increased 6.5% last week compared to the week before.
- While mortgage applications to purchase a home increased last week, the total number is still 38% lower than the same time last year, CNBC reports.
- This marks the second straight week of climbing demand for mortgages.
- Refinancing applications were also up—about a 5% increase—but remained 74% lower than the same week last year.
- The average interest rate on a 30-year fixed-rate mortgage declined from 6.79% to 6.71% on loans with a 20% down payment.
- While the average was 6.71%, rates were higher at the beginning of the week and dropped quickly after news broke about Silicon Valley Bank’s collapse.
Why it’s news
While demand may be up, mortgage applications are still significantly below the rates of a year ago. Homebuying slowed considerably in February as mortgage rates rose nearly a full percentage point, CNBC reports.
Buyers seem to have a renewed interest in making a purchase, but there is no way to know how long that interest may last.
John Burns of John Burns Real Estate Consulting explained that he saw an uptick in new home sales in February though rates were higher. “That always happens when rates surge, and it only lasts a few weeks,” he says.
One of the nation’s largest homebuilders, Lennar, reported better-than-expected earnings. Company chairman Stuart Miller says, “Homebuyers are considering the possibility that today’s interest rate environment may be the new normal. Accordingly, the housing market continues shifting as growing household and family formation continued to drive demand against a chronic supply shortage.”
Mortgage rates declined further on Monday but bounced back up the following day after the February consumer price index was released.