According to data from the Mortgage Brokers Association, home borrowing costs have decreased for the third consecutive week, leading to an increase in demand for mortgage loans. The average rates for 30-year mortgages fell to 7.01% for the week ending May 17, reaching their lowest levels in nearly two months. This drop in rates contributed to a 1.9% rise in mortgage applications.
More borrowers are opting for refinancing options due to the availability of lower mortgage rates, with refinancing applications increasing by 7% from the previous week, driven in part by refinancing options offered by the Department of Veterans Affairs (VA). MBA vice president and deputy chief economist Joel Kan noted that the decrease in rates prompted some borrowers to take action, resulting in increases in both conventional and government refinance applications.
However, despite the lower rates, purchase activity remains low due to a shortage of houses for sale. Purchase activity declined this week even with the decrease in rates. Overall, the current trend shows an increase in mortgage demand as rates reach a 7-week low, with more borrowers considering refinancing options but facing challenges in purchasing homes due to limited availability.
