Mortgage demand surged to a six-month high last week, driven by falling interest rates and bolstered by both a weak jobs report and a positive outlook from the Federal Reserve. Total mortgage demand jumped 7% for the week ending August 2nd, compared to the previous week, according to the latest data.
- Refinance applications led the charge, with demand soaring to an index of 661.4. This represents a 16% increase from the previous week and marks the highest level since July 8th, 2022.
- Purchase demand also saw an uptick, albeit modestly. The purchase index rose to 133.9, an increase of 0.8% from the prior week and a 5.0% rise from yearly lows. This marks the first increase in purchase demand in four weeks, signaling a potential stabilization in the housing market.
Rates: The average contract interest rate for a 30-year fixed-rate mortgage fell to 6.55% for the week ending August 2nd, down 17 basis points from the previous week. This is the lowest level since May 2023, offering a glimmer of relief to prospective homebuyers and those looking to refinance.
Optimism: The dip in rates follows a jobs report that showed continued cooling in the labor market, coupled with optimistic signals from the Federal Reserve, which indicated the possibility of rate cuts in September. These developments have injected a sense of optimism into the mortgage market, spurring increased activity.
Bottom Line: As the housing market continues to respond to economic signals, the coming weeks will be crucial in determining whether this momentum can be sustained. The interplay between interest rates, labor market conditions, and Federal Reserve policies will undoubtedly shape the landscape for mortgage demand in the near term.