Buyer demand for mortgages jumps for first time!

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Real Estate

Rise in FHA purchase applications suggests more first-time buyers are navigating high prices, tight inventories.


Homebuyer demand for mortgages was up for the first time in nearly a month during the first week in August, and a rise in applications for FHA loans suggests more first-time homebuyers are coming into the market.

The Mortgage Bankers Association’s Weekly Mortgage Applications Survey showed requests for purchase loans were up a seasonally-adjusted 2 percent from the week before. That represents an 18 percent drop in applications from the same time a year ago. But the week-over-week gain — particularly a 3.3 percent increase in applications for FHA purchase loans — was still cause for some cautious optimism.

“With low for-sale inventory keeping home price appreciation in many markets at record highs, the jump in FHA purchase applications is potentially a sign that more first-time buyers are finding purchase options despite the high prices,” said the MBA’s Joel Kan, in a statement.

Although mortgage rates rose slightly, demand for refinancing also picked up, rising 3 percent from the week before. Requests to refinance were down 8 percent from a year ago, but still represented 68 percent of all applications. Despite a dramatic drop in rates for adjustable-rate mortgages, requests for ARMs accounted for only 3.2 percent of applications.

For the week ending Aug. 6, the MBA reported average rates for the following loan types:

*For 30-year fixed-rate conforming mortgages (with loan balances of $548,250 or less), rates averaged 2.99 percent, up from from 2.97 percent the week before. Although points decreased to 0.30 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, the effective rate also increased from last week.

*Rates for 30-year fixed-rate jumbo mortgages (with loan balances greater than $548,250) averaged 3.15 percent, up from 3.12 percent the week before. Although points decreased to 0.29 from 0.30, the effective rate also increased from last week.

*For 30-year fixed-rate FHA mortgages, rates averaged 3.06 percent, down from 3.08 percent the week before. With points also decreasing to 0.27 from 0.29, the effective rate also decreased from last week.

*Rates for 15-year fixed-rate mortgages averaged 2.35 percent, up from 2.33 percent the week before. With points increasing to 0.25 from 0.23, the effective rate also increased from last week.

*For 5/1 adjustable-rate mortgage (ARM) loans, rates averaged 2.52 percent, down from 2.93 percent the week before. With points decreasing to 0.15 from 0.20, the effective rate decreased from last week.

recent analysis by Black Knight showed falling mortgage rates fueled a mini-boom in refinancing during July, with a 24 percent month-over-month jump in homeowners refinancing to lock in lower rates. But rate locks on purchase loans fell 7 percent, suggesting lower rates weren’t enough to offset the impact of rising home prices and ongoing inventory shortages.