The numbers: Mortgage rates fell as the U.S. Federal Reserve signaled a potential pause in interest-rate hikes. Home buyers took advantage of the opportunity, boosting demand for mortgages.
Mortgage applications rose 6.3% in the latest week as rates fell across the board.
Demand for purchases and refinancing rose. That pushed the market composite index — a measure of mortgage application volume — up, the Mortgage Bankers Association (MBA) said Wednesday.
The market index rose 6.3% to 227.8 for the week ending May 5 from a week earlier. A year ago, the index stood at 358.9.
Key details: A wave of recent homeowners likely took advantage of the moment to refinance. The refinance index rose 10%.
Home buyers also dipped their toes in. The purchase index — which measures mortgage applications for the purchase of a home — rose 4.8% from the previous week.
Rates fell for all mortgage types.
The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 6.48% for the week ending May 5. That’s down from 6.5% the week before, the MBA said.
For homes sold for over $726,200, the average rate for the 30-year was 6.33%, down from 6.37% the previous week.
The 15-year fell to 5.91%, from the previous week’s 6.01%.
The rate for adjustable-rate mortgages fell to 5.35% from 5.48% previously.
The big picture: With the Fed signaling a potential halt in hiking interest rates, the market is expecting rates to gradually decline. That’s offering home buyers some relief. Mortgage rates have doubled since early 2022.
Yet ome buyers weren’t exactly jumping at the opportunity, given the underlying challenge of low supply. There aren’t many homes on the market for sale. Plus, some real-estate agents are reporting seeing multiple bids for homes on the market.
What the MBA said: The MBA also noted refinance activity jumped to the highest level since September 2022, “although there is only a small pool of borrowers who can benefit from refinancing with rates at these levels,” Joel Kan, vice president and chief economist at the MBA, said.
Market reaction: The yield on the 10-year Treasury note
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was trading around 3.5% in early morning trading Wednesday.
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