Mortgage Applications Increase as 30-Year Rate Maintains Low Levels

Mortgage applications experienced a significant boost last week, as the 30-year rate continued to stay below the highs seen in October. According to data from the Mortgage Bankers Association, applications rose by 10.4% in the week ending January 12 compared to the previous week.

Inflation data and a decrease in Treasury yields played a crucial role in this increase. As Treasury yields moved lower, mortgage rates declined across all loan types. MBA's Deputy Chief Economist Joel Kan highlighted this trend and stated that it supported the rise in mortgage applications.

The average 30-year fixed mortgage rate, as reported by Freddie Mac, stood at 6.66% last week. Although this marked an increase from the previous week's rate of 6.62%, it is still significantly lower than the high of 7.79% recorded in October.

Looking ahead, Kan expressed cautious optimism and stated that if rates continue to ease, MBA anticipates an upturn in home purchases over the next few months.

Notably, refinance activity also saw a notable increase last week. The Refinance Index, as reported by the MBA, rose by 11% compared to the previous week and was 10% higher than the same week one year ago.

Despite mortgage rates remaining below their peak, they are still historically high. As a result, there has been a surge in adjustable-rate mortgage applications, which are home loans with an interest rate that adjusts based on the market. The adjustable-rate mortgage share of total applications increased to 5.9%.

In the premarket session on Wednesday, home builder stocks experienced a slight decline. D.R. Horton was down 0.6%, KB Home dropped by 0.5%, and Toll Brothers decreased by 0.8%.