According to the Mortgage Bankers association's seasonally adjusted Index, mortgage applications to purchase homes rose by 8% last Week compared to the prior week. This was due in part to the demand for adjustable-rate loans. Applications were, however, 10% lower than they were in the same week one year ago.
The big rise in mortgage rates could have spurred homebuyer interest, possibly because consumers were concerned about rising rates. Mortgage rates saw their highest point since 2008, with the largest one-week jump in 13 years.
The average 30-year fixed rate mortgage interest rate with conforming loan balances of $647,200 or less has increased to 5.98%, from 5.65%. Points have risen to 0.77, from 0.71, for loans with a 20% downpayment. Rates are nearly double what it was one year ago.
Learn more: In May, the sales of existing properties fell.
Joel Kan, an MBA economist wrote that purchase applications rose for the second week. This was mainly due to conventional applications. However, the ARM portion of applications jumped back up to more than 10%. "The average loan size, at just over $420,000, is well below its $460,000 peak earlier this year and is potentially a sign that home price-growth is moderating."
Adjustable-rate mortgages offer lower interest rates and can generally be fixed for terms of five, seven or 10 years. These loans are considered more risky as they can be adjusted to higher or lower rates. However they are also underwritten more strictly than in the past housing boom.
Buyer demand is likely to be on the rise as there are now more homes available for sale. According to Realtor.com nationwide, active inventory has increased by 17% annually. According to Realtor.com, homes are selling faster now than they did a year ago.
The week's number of applications to refinance a mortgage fell 3% and was 77% lower than the previous week. Refinance activity has declined to 29.7% from 31.7% last week.