Mortgage refinance demand surges even as rates cross back over 7%. Here’s why

Overall
mortgage
demand
has
now
moved
sideways
for
three
straight
weeks,
but
last
week
saw
a
split
between
those
looking
to
buy
a
home
and
those
hoping
to
save
money
with
a
refinance.

Total
mortgage
application
volume
increased
just
0.1%
last
week
compared
with
the
previous
week,
according
to
the
Mortgage
Bankers
Association’s
seasonally
adjusted
index,
essentially
flat.

The
average
contract
interest
rate
for
30-year
fixed-rate
mortgages
with
conforming
loan
balances
($766,550
or
less)
increased
to
7.01%
from
6.91%,
with
points
remaining
at
0.59
(including
the
origination
fee)
for
loans
with
a
20%
down
payment.

“Mortgage
rates
moved
higher
last
week
as
several
Federal
Reserve
officials
reiterated
a
patient
posture
on
rate
cuts.
Inflation
remains
stubbornly
above
the
Fed’s
target,
and
the
broader
economy
continues
to
show
resiliency.
Unexpectedly
strong
employment
data
released
last
week
further
added
to
the
upward
pressure
on
rates,”
said
Joel
Kan,
MBA’s
vice
president
and
deputy
chief
economist.

Applications
to
refinance
a
home
loan
jumped
10%
for
the
week
and
were
4%
higher
than
the
same
week
one
year
ago.
Refinance
demand
usually
drops
when
rates
rise,
but
rates
had
fallen
back
slightly
in
the
previous
weeks,
so
some
homeowners
may
have
been
waiting
for
them
to
go
even
lower.
When
rates
rose
last
week,
they
may
have
been
concerned
rates
would
then
move
even
higher,
and
therefore
jumped
in
to
get
what
savings
they
could.

Applications
for
a
mortgage
to
purchase
a
home
fell
5%
for
the
week
and
were
23%
lower
than
the
same
week
one
year
ago.
The
spring
market
is
well
underway,
and
while
there
is
slightly
more
inventory
now
than
there
was
a
year
ago,
it
is
still
well
below
where
it
should
be
given
high
demand.
Home
prices
are
also
showing
no
sign
of
cooling.

Investors
have
been
waiting
for
the
all
important
monthly
report
on
consumer
prices,
an
indicator
of
inflation.
It
is
set
to
be
released
Wednesday
morning,
and
depending
on
the
outcome,
mortgage
rates
could
make
a
strong
move
in
either
direction.