Mortgage rates fall for the first time in two months. Buyers are ...

2 hours ago

Morningstar.com

By Aarthi Swaminathan

Rising for-sale inventory, a strong economy and falling rates are drawing home buyers in, industry group says

The numbers: Mortgage rates fell for the first time in over two months, pushing home buyers to jump back into the market.

Applications for mortgages in the latest week rose, bringing the market composite index - a measure of mortgage application volume - up in the past week, according to the Mortgage Bankers Association on Wednesday.

The index rose by 6.3% to 208 for the week ending Nov. 22, from a week before. A year ago, the index stood at 176.1.

Key details: The purchase index - which measures mortgage applications for the purchase of a home - rose 12.4% from a week prior.

On the other hand, the refinance index fell by 2.6% from the previous week.

Rates rose mostly across the board.

The average contract rate for the 30-year mortgage for homes sold for $766,550 or less was 6.86% for the week ending Nov. 22. That's down 4 basis points from a week before.

The rate for jumbo loans, or the 30-year mortgage for homes sold for over $766,550, was 6.97%, down 6 basis points from the prior week.

The average rate for a 30-year mortgage backed by the Federal Housing Administration was 6.61%, down 7 basis points from the previous week.

The 15-year was down 3 basis points, to 6.29%.

The rate for five-year adjustable-rate mortgages was unchanged at 6.34% from the prior week.

The big picture: Home buyers are returning to the housing market, breathing new life into a sector that was facing the slowest pace of sales activity in three decades.

Multiple factors explain why buyers are back. American consumers are feeling confident about the direction of the U.S. economy. There are more homes for sale. Mortgage rates don't show any signs of falling significantly, so buyers find little reason to wait.

What the MBA said: "Purchase activity drove overall applications higher last week, as conventional purchase applications picked up pace and mortgage rates declined for the first time in over two months," Joel Kan, deputy chief economist at the MBA, said in a statement.

"With the growth in for-sale inventory and signs that the economy remains strong, buyers have remained in the market even though rates have increased recently," he added.

-Aarthi Swaminathan

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11-27-24 0700ET