Mortgage Demand on the Rise as Rates Reach 7-Week Low

Mortgage demand has increased as interest rates have hit a 7-week low, according to data from the Mortgage Brokers Association. This marks the third consecutive week of declining home borrowing costs, with the average rate for 30-year mortgages dropping to 7.01% for the week ending on May 17th. This has led to a 1.9% increase in mortgage applications, with more borrowers opting for refinancing options, which increased by 7% from the previous week.

The availability of lower mortgage rates has encouraged borrowers to take action, particularly with refinancing options from the Department of Veterans Affairs (VA) driving the increase. Joel Kan, the MBA vice president and deputy chief economist, noted that the decrease in rates has prompted increases in both conventional and government refinance applications.

Despite the lower rates, purchase activity has declined this week due to a lack of for-sale houses. While refinancing options have seen a boost, the shortage of available homes on the market is impacting purchase activity negatively. Kan highlighted this issue as a factor in the overall housing market trend.

Overall, the decrease in interest rates has motivated borrowers to take advantage of refinancing options, while the shortage of available homes for sale has limited purchase activity. The impact of these factors on the housing market will continue to be monitored in the coming weeks.