Mortgage demand rises in latest week, despite loans becoming more expensive

By Aarthi Swaminathan

Mortgage applications rose 7.4% in the last week, the Mortgage Bankers Association said.

The numbers: Demand for mortgages increased despite mortgage interest rates rising again.

Mortgage demand rose 7.4% in the last week as interest rates remain at highs last seen in November.

Both the demand for purchases and for refinancing increased. That has pushed the composite market index — a measure of the volume of mortgage applications — higher, the Mortgage Bankers Association (MBA) said on Wednesday.

The market index rose 7.4% to 201.5 in the week ended March 3 compared to the previous week. A year ago the index was 502.5.

Data from previous weeks has been revised and the index was 187.6 last week.

Key details: The refinancing index rose 9.4% but fell 76% year-on-year.

The purchase index – which measures mortgage applications for home purchases – rose 6.6% from last week.

The average contract rate for the 30-year mortgage for homes selling for $726,200 or less was 6.79% for the week ended March 3rd.

That’s up 6.71% the week before, the MBA said.

For homes that sold for over $726,200, the 30-year average rate was 6.49%, up from 6.44% the previous week.

15-year-olds rose to 6.25% from 6.13% last week.

The rate on adjustable rate mortgages rose to 5.75% from 5.73% the previous week.

The Big Picture: Higher interest rates are forcing homebuyers to wait. But those who are able to sidestep rates, like cash shoppers, or those who absolutely need to relocate are still active, which is likely reflected in the data.

But broadly speaking, rising interest rates again should hurt home sales, as they did in the last quarter of 2022.

What the MBA said: “Even at higher rates, there was an increase in applications last week, but this compared to two weeks of declines at very low levels, including a holiday week,” said Joel Kan, vice president and associate chief economist at the MBA.

“Order requests were still down 42%,” he added. “Many borrowers are waiting on the sidelines for interest rates to fall again.”

Market Reaction: The yield on the 10-year Treasury rose to over 3.99% in early morning trade on Wednesday.

-Aarthi Swaminathan

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03-08-23 0928ET

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