Declines in the interest rate for a mortgage declined enough to bring buyers back to the market, though levels remain suppressed relative to last year. File photo by Alexis C. Glenn/UPI | License Photo
March 22 (UPI) -- Though interest rates remain high relative to year-ago levels, the number of applications to buy a home is on the rise, the Mortgage Bankers Association reported Wednesday.
Mortgage applications increased 3% from week-ago levels and the number of owners looking to refinance an existing mortgage jumped 5% over the week. Joel Kan, the deputy chief economist at the association, attributed much of it to a decline in lending rates.
"Mortgage rates declined for the second week in a row, with the 30-year fixed rate dropping to 6.48%, the lowest level in a month," he said.
The news followed a similar report from the National Association of Realtors that found existing home sales increased by 14.5% in February, the largest month-on-month percentage increase since July 2020 and ending a 12-month losing streak.
NAR found that inventories of existing homes are at historic lows and sellers are still fielding multiple offers. While sales are strong, the average price of a home declined by 0.2% relative to year-ago levels to $363,000, a decline that ended a near-decade-long increase in the price for an existing home.
Meanwhile, the number of first-time home buyers is on the decline. NAR found those buyers accounted for 27% of total existing-home sales last month. The November level of 26% was the lowest on record for the NAR.
The MBA, for its part, said that while buying was stronger short-term, its purchase index still showed levels were 36% lower than the same week in 2022. Its refinance index, meanwhile, is 68% lower than year-ago levels.
"Both purchase and refinance applications increased for the third week in a row as borrowers took the opportunity to act, even though overall application volume remains at relatively low levels," he said.
A 30-year, fixed-rate mortgage had a 4.16% interest rate at this time last year. That could pivot on what happens next at the U.S. Federal Reserve when it considers its next steps in the fight against consumer-level inflation. A 25 basis point, or 0.25% increase in lending rates, is widely expected.