Mortgage demand from homebuyers hits highest level since September

As the housing market enters its traditionally slowest season, homebuyers are likely taking a last breath as supply on the market increases and prices soften.

Mortgage applications to buy a home rose 6% last week, reaching their strongest level since September, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was 31% higher than the same week a year ago.

This was despite the fact that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $806,500 or less increased from 6.31% to 6.34%, and points including the origination fee for loans with 20% down payment increased from 0.58 to 0.62. This rate is 52 basis points lower than a year ago.

“Purchase applications for conventional, FHA and VA loans rose as potential homebuyers continued to shop, especially in markets where inventories are rising and sales price growth is slowing. This was the strongest start to November since 2022, according to the week’s unadjusted purchasing index,” MBA economist Joel Kan said in a statement.

Refinancing demand, which was very strong last month, fell 3% this week but was still 147% higher than the same week a year ago, thanks to lower rates.

“Higher mortgage rates suppressed some refinancing activity as conventional and VA refinancing applications decreased throughout the week and the average loan size available for refinancing fell to its lowest level in more than a month,” Kan added.

Mortgage rates haven’t moved much so far this week, especially given the bond market’s Veterans Day close. Markets are eyeing the potential end of the government shutdown this week, which could bring a stronger reaction to interest rates.