Mortgage applications jump 3%, still down double-digits from 2022

June 28 (UPI) -- The number of people taking out mortgage applications for a home climbed 3% from the week before but remained 21% lower from the same time last year, according to the latest statistics from the Mortgage Bankers Association on Wednesday.

The association's seasonally adjusted index indicated that it was the third consecutive week mortgage applications increased to reach their highest level since early May, despite high mortgage rates.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $726,200 or less increased to 6.75% from 6.73%.

"Mortgage rate changes varied across loan types last week, with the 30-year fixed rate increasing slightly to 6.75%," said Joel Kan, the MBA's vice president and deputy chief economist. "The spread between the jumbo and conforming rates widened to 16 basis points, the third week in a row that the jumbo rate was higher than the conforming rate.

"To put this into perspective, from May 2022 to May 2023, the jumbo rate averaged around 30 basis points less than the conforming rate."

Mortgage refinancing applications jumped 3% last week but were 32% lower than the same week one year ago.

"Purchase applications increased for the third consecutive week to the highest level of activity since early May but remained more than 20% lower than a year ago levels. New home sales have been driving purchase activity in recent months as buyers look for options beyond the existing-home market.

"Existing-home sales continued to be held back by a lack of for-sale inventory as many potential sellers are holding on to their lower-rate mortgages."

The latest mortgage news came before Federal Reserve Chairman Jerome Powell promised tougher measures on inflation Wednesday, indicating there will likely be multiple interest rate increases ahead and possibly at an aggressive pace.

"We believe there's more restriction coming," Powell said during a monetary policy session in Sintra, Portugal. "What's really driving it is a very strong labor market."