After three consecutive weeks of rising mortgage rates, the housing market experienced a 2.6% increase in applications last week. This was fueled by a decrease in borrowing costs, which dropped to an average of 7.18% for 30-year fixed-rate mortgages by the end of the week.
The drop in rates was attributed to a slowing job market and low wage growth, according to Mike Fratantoni, MBA senior vice president and chief economist. As a result, Treasury rates also decreased, causing mortgage rates to follow suit.
First-time homebuyers were also able to benefit from this trend, as FHA loans saw a 5% increase in applications. This led to a 2% rise in purchase activity and marked the first time in three weeks that FHA-backed 30-year fixed-rate mortgages had decreased to 6.92%. These government lending programs are essential for first-time homebuyers who make up about half of all purchase loans.
Additionally, there was also a 5% increase in homeowners looking to refinance their loans based on MBA data. Mortgage refinancing remains popular among homeowners seeking to take advantage of lower interest rates.
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