Weekly mortgage demand increases, driven by a strange surge in refinancing


A for sale sign in front of a home in Arlington, Virginia, on August 22, 2023.

Andrew Caballero-Reynolds | AFP | Getty Images

Mortgage rates rose again last week, and so did demand for refinances, which at face value doesn’t make a lot of sense.

Applications to refinance a home loan jumped 13% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Application volume was still 29% lower than the same week one year ago.

Refinancing demand usually moves in the opposite direction as mortgage rates, but that was not the case. It may also be because the number of refinances is so small that any minor change results in a big percentage move. It may also be that the number of refinances are so small right now that any minor change results in a big percentage move.

Applications for a mortgage to purchase a home increased 2% for the week and were 26% lower than the same week one year ago.

“Purchase applications increased for conventional and FHA loans over the week,” said Joel Kan, an MBA economist in a release. Homebuyers are still facing higher rates and a limited inventory of homes for sale, making the purchase process more difficult. “

With the home price now rising, the average loan amount on a purchase was $416.800, the highest in six weeks. The recent increase in homes on the market may indicate that demand is returning. The overall level of supply, however, is still quite low, which is leading to bidding wars again.

Mortgage rates haven’t moved much this week, as investors wait to hear the results of Wednesday’s Federal Reserve meeting and commentary from Chair Jerome Powell on the future of interest rates.