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Mortgage rates are settling near the mid-6% range, tempting prospective home buyers, who are applying for mortgages in greater numbers.
Mortgage applications to purchase a home—a gauge of future homebuying activity—rose 7% in the latest week and are 4% higher than a year ago, the Mortgage Bankers Association reports.
“Mortgage applications continue to rise as buyers capitalize on lower rates and increased [housing] inventory,” says Jessica Lautz, deputy chief economist at the National Association of REALTORS®. “The days on market have lengthened, allowing buyers to view homes and submit competitive offers. Inflation has also decreased this week, possibly making it a bit easier to save for a home.”
Still, housing inventory remains tight, which means buyers are facing competition for properties. Bidding wars are still present, and the typical home seller received an average of 2.6 offers on their home last month, according to the REALTORS® Confidence Index.
Greater Loan Options, Bigger Loans
Mortgage application activity for home purchases was up across all loan categories last week, says MBA Chief Economist Joel Kan. Government purchase applications posted an 11% increase, which Kan says was helped by the FHA loan rate dropping to 6.34%.
But amid higher home prices, average loan sizes are climbing to new highs. The average purchase loan amount rose to $460,800—the highest ever recorded, according to MBA data.
The 30-year fixed-rate mortgage averaged 6.65% this week, Freddie Mac reports. “Mortgage rates continue to be relatively low versus the last few months, and home buyers have responded,” says Sam Khater, Freddie Mac’s chief economist. “The combination of modestly lower mortgage rates and improving inventory is a positive sign for home buyers in this critical spring homebuying season.”
At this week’s average rate, the monthly mortgage payment would translate to $2,054 for a home priced at $400,000, assuming a 20% down payment, Lautz says. With a 10% down payment, the typical payment would be $2,311 per month.
Freddie Mac reports the following national averages with mortgage rates for the week ending March 13:
- 30-year fixed-rate mortgages: averaged 6.65%, rising from last week’s 6.63% average. A year ago, rates averaged 6.74%.
- 15-year fixed-rate mortgages: averaged 5.8%, up slightly from last week’s 5.79% average. Last year at this time, rates averaged 6.16%.
