After dropping to a 28-year low the previous week, mortgage demand recovered slightly, even though interest rates marched higher.
Total mortgage application volume rose 7.4% last week, according to the Mortgage Bankers Association's seasonally adjusted index.
This happened even as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.79% from 6.71%, with points rising to 0.80 from 0.77 (including the origination fee) for loans with a 20% down payment. That is the highest level since November 2022 and 270 basis points higher than a year ago.
"Even with higher rates, there was an uptick in applications last week, but this was in comparison to two weeks of declines to very low levels, including a holiday week," noted Joel Kan, an MBA economist.
Applications to refinance a home loan jumped 9% week to week but were 76% lower than the same week one year ago. At last week's rate, there were barely 200,000 borrowers who could get monthly savings from a refinance, compared with well over 2 million who could have benefited at the rate one year ago, according to calculations from Black Knight, a mortgage data and analytics firm.
Mortgage applications to purchase a home rose 7% for the week and were 42% lower than the same week one year ago. There is more inventory on the market now compared with a year ago, but new listings are still weak, suggesting that what is for sale isn't selling very quickly.
The jump in demand could just be the start of the traditionally busy spring market. The share of adjustable-rate mortgage applications, however, rose last week, suggesting more buyers are stretching to afford today's still pricey housing market. ARMs offer lower interest rates at higher risk.
Mortgage rates have moved even higher, crossing over 7%, according to a separate survey from Mortgage News Daily. Federal Reserve Chairman Jerome Powell on Tuesday told lawmakers on Capitol Hill that rate hikes could accelerate again. That spooked investors and sent bond yields higher. Mortgage rates loosely follow the yield on the 10-year Treasury.
"Even though Fed Chair Powell didn't say anything remarkably new or different, markets read enough into his delivery to change the course of Fed Funds Rate expectations in a meaningful way," said Matthew Graham, chief operating officer of Mortgage News Daily.