The numbers: Home shoppers are fed up waiting for the economy to turn, and with the prospect of further rate hikes, they’re slowly coming around to purchasing new homes and refinancing their mortgages.
Despite rates topping 6%, demand from buyers has bounced back slightly, as reflected in the market composite index, a measure of mortgage application volume, the Mortgage Bankers Association (MBA) said on Wednesday.
The market index rose 3.8% to 264.7 in the week ending September 16. A year ago, the index stood at 742.7.
The big picture: Mortgage rates are now at the highest level since October 2008. But the prospect of even higher interest and payments may be pushing would-be buyers and homeowners to act.
Higher mortgage rates are likely to persist through the rest of the year, as the Federal Reserve battles the worst inflation the U.S. has seen in 40 years.
So shoppers may be searching for an opportunity to buy now, versus a couple of months from now when rates and home prices could rise further.
“The weekly gain in applications, despite higher rates, underscores the overall volatility right now as well as Labor Day-adjusted results the prior week,” Joel Kan, associate vice president of economic and industry forecasting at the MBA, said in a statement.
Key details: The refinance index soared by 10%, but was still down 83% compared to a year ago.
The purchase index — which measures mortgage applications for the purchase of a home — rose by 1% from the previous week.
The average contract rate for the 30-year mortgage for homes sold for $647,200 or less was 6.25% for the week ending September 16. That’s up from 6.01%% the week before, the MBA said.
For homes sold for over $647,200, the average rate for the 30-year was 5.79%. The 15-year rose to 5.56%.
The rate for adjustable-rate mortgages, which comprise 9.1% of total applications, rose to 5.14%.
Market reaction: The yield on the 10-year Treasury note TMUBMUSD10Y, 3.687% fell below 3.6% in early morning trading.
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at firstname.lastname@example.org