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Demand for adjustable-rate mortgages surges, as interest rates make biggest jump in 13 years

Demand for adjustable-rate mortgages surges, as interest rates make biggest jump in 13 years

Mortgage applications to purchase a home rose 8% last week compared with the previous week, bolstered in part by demand for adjustable-rate mortgages.

Mortgage applications to purchase a home rose 8% last week compared with the previous week, bolstered in part by demand for adjustable-rate mortgages, according to the Mortgage Bankers Association’s seasonally adjusted index.

Applications were, however, 10% lower than they were in the same week one year ago.

A big jump in mortgage rates may have actually spurred homebuyer demand, perhaps as consumers worried rates would move even higher. Mortgage rates surged to the highest level since 2008, while making their biggest one-week jump last week in 13 years.

Meanwhile, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.98% from 5.65%, with points rising to 0.77 from 0.71 (including the origination fee) for loans with a 20% down payment. Rates are now nearly double what they were one year ago.

“Purchase applications increased for the second straight week — driven mainly by conventional applications — and the ARM share of applications jumped back to over 10%,” wrote Joel Kan, an MBA economist. “The average loan size, at just over $420,000, is well below its $460,000 peak earlier this year and is potentially a sign that home price-growth is moderating.”

https://www.nbcnews.com/business/business-news/demand-adjustable-rate-mortgages-surges-interest-rates-make-biggest-ju-rcna34707


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