Recently, the US housing market is approaching its traditional slow season, but unexpectedly, there has been a surge in housing demand. According to the latest data from the Mortgage Bankers Association (MBA), as of last week, there was a 6% increase in mortgage applications for home purchases, reaching the highest level since September, which is 31% higher than the same period last year. Analysts point out that this is due to an increase in market supply and a softening trend in housing prices, attracting buyers to make moves before the end of the year.
This surge in demand comes at a time when interest rates continue to rise. Last week, the average contract interest rate for a 30-year fixed-rate mortgage (for loan amounts below $806,500) rose to 6.34%, slightly higher than the previous week’s 6.31%; and the points for a 20% down payment loan (including loan origination fees) also increased from 0.58 to 0.62. Nevertheless, this rate is still about 52 basis points lower than the same period last year.
MBA economist Joel Kan stated, “The volume of purchase applications for conventional, Federal Housing Administration (FHA), and Veterans Affairs (VA) loans has increased, indicating that potential buyers are still actively searching for properties, especially in markets where inventory is increasing and housing price growth is slowing down. By the unadjusted index, this is the strongest start to November since 2022.”
On the other hand, after a strong rebound in refinancing demand in recent weeks, there has been a decline. Last week, refinancing applications decreased by 3%, but they are still 147% higher than the same period last year, mainly due to the significant overall decrease in interest rates compared to last year.
Kan said, “The higher mortgage rates have indeed dampened some refinancing activities, with declines in refinancing applications for conventional and VA loans, and the average loan amount for refinancing has dropped to the lowest level in over a month.”
Since the beginning of this week, mortgage rates have shown minimal fluctuations, partly due to the halt in trading in the US bond market for Veterans Day. Currently, the market is watching whether the federal government can end the shutdown deadlock, and if the situation becomes clearer, the interest rate market may experience a stronger reaction.