Last week, mortgage applications saw a 2.6% increase, driven by the first decline in borrowing costs in three weeks. The average 30-year fixed-rate mortgage dropped to 7.18% in the week ending on May 3, according to data from the Mortgage Bankers Association (MBA). This decrease in rates was attributed to a slowing job market, with wage growth at its slowest pace since 2021.
Purchase activity also increased by 2%, thanks to a 5% rise in applications for Federal Housing Administration (FHA) loans. FHA-backed 30-year fixed-rate mortgages fell to 6.92%, marking a decline for the first time in three weeks. Mike Fratantoni, MBA senior vice president and chief economist, highlighted the importance of government lending programs for first-time homebuyers, who account for around half of purchase loans.
Moreover, there was a 5% increase in refinance applications as shown by MBA data. Fratantoni emphasized the significance of government lending programs in providing financing options for first-time homebuyers and those looking to refinance their current mortgages. With these programs, more people are able to enter the housing market and achieve their dream of owning a home.