The housing market experienced a surge in homebuyer demand for mortgages after a drop in interest rates.
The Mortgage Bankers Association reported a 6.3% increase in total mortgage demand compared to the previous week, driven by lower mortgage rates.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.86%, with points remaining steady at 0.70 for loans with a 20% down payment.
This reduction in rates prompted hesitant potential buyers to re-enter the market.
The increase in mortgage applications reflects pent-up demand among homebuyers who were waiting for more favorable conditions, such as lower rates or increased housing supply.
The supply of homes for sale has improved significantly this year compared to previous months.
Despite recent increases in mortgage rates, buyers remain active in the market due to the growth in for-sale inventory and signs of a robust economy.
The average purchase loan size has also increased, indicating that buyers are willing to invest more in their home purchases.
Refinancing applications saw a slight decline, primarily driven by reductions in FHA and VA refinances.
Mortgage rates may experience volatility in the short term due to unique market conditions during the Thanksgiving week.
The current housing market presents both opportunities and challenges for homebuyers and investors, with fluctuating mortgage rates and gradually improving housing supply.
The interplay between interest rates, housing supply, and buyer demand will shape the future of the mortgage landscape.