Applications for purchase mortgages rose 2% last week compared to the previous week, but were down 1% from a year earlier, according to the Mortgage Bankers Association’s weekly survey.
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Homebuyer demand for mortgages rose last week as borrowers took advantage of falling interest rates that have since unwinded, but economists said they saw little room for interest rates to retreat in the coming months. are.
The Mortgage Bankers Association’s weekly survey showed purchase loan applications last week rose a seasonally adjusted 2% from the previous week, but were down 1% from a year earlier.
The increase in purchase applications for the week ending November 15 was driven by conventional loans eligible for purchase by FHA and Fannie Mae and Freddie Mac, with FHA purchase applications increasing 7%.
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Joel Kang
MBA Deputy Chief Economist Joel Kang said, “In some markets, inventory for sale is decreasing, and some potential buyers are looking forward to increased supply and a modest return compared to a matching 30-year fixed rate.” “We were able to take advantage of lower FHA interest rates.” said in a statement.
The 30-year fixed-rate compliant mortgage rate hit a 2024 low of 6.03% on Sept. 17, before rising to its highest level since July, according to Rate Lock data tracked by Optimal Blue.
Mortgage interest rates are on the rise
30-year fixed-rate mortgage rates reached 6.84% the day after the Nov. 5 election, then fell 14 basis points in the next two days, giving homebuyers a brief reprieve, according to Optimal Blue data. Ta.
The Fed lowered short-term interest rates on September 18 and November 7, but long-term rates are rising on expectations that the Fed will be in no hurry to cut rates in the coming quarters.
Bond market investors are also weighing whether President-elect Donald Trump’s pledges to raise tariffs, cut taxes and deport millions of immigrants will lead to inflation.
Interest rates are expected to be lowered in stages
Source: Fannie Mae and Mortgage Bankers Association November 2024 forecast.
In a forecast released Thursday, MBA and Fannie Mae economists say they expect interest rates on 30-year fixed-rate mortgages to be unlikely to fall below 6% next year or in 2026.
Fannie Mae economists said 2024 is expected to be the worst year for existing home sales since 1995, and recent interest rate increases are undermining expectations for a recovery in 2025.
Economists at Pantheon Macroeconomics expect the Fed to cut short-term rates by another 1.25 percentage points this week and next, but many homeowners continue to feel locked into existing mortgage rates. He said there would be.
“Lower mortgage rates will provide marginal support to the housing market,” Pantheon economists wrote in the latest U.S. Economic Monitor, “and we expect interest rates to fall next year as the Fed gradually eases further.” “There is,” he said. “However, as the spread between new and existing mortgage rates is likely to remain very large, the best we can realistically expect is for any recovery in sales to be very gradual and subdued. It is.”
Economists at Pantheon said slower economic growth will weigh on employment and “deplete the pool of potential home buyers, further slowing the housing market’s recovery.”
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