After surging to the highest level since the presidential election, demand for home loans remained steadily elevated last week.
Total mortgage application volume rose 0.6% on a seasonally adjusted basis from the previous week. Volume was nearly 14 percent lower compared with the same week one year ago, according to the Mortgage Bankers Association, when lower interest rates sparked a refinance boom.
Low rates are giving refinances another slight boost. Refinance volume for the week was 2 percent higher than the previous week but still about 30 percent lower than a year ago.
"Both the 10-year Treasury yield and the 30-year conventional mortgage fixed rate held steady last week keeping rates well below the recent highs," said Lynn Fisher, MBA's vice president of research and economics. "The recent pause in the upward movement of interest rates continues to encourage late-to-the-game borrowers to refinance and to assist those ready to purchase."
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $424,100 or less remained unchanged at 4.13 percent, with points decreasing to 0.34 from 0.35, including the origination fee, for 80 percent loan-to-value ratio loans.
Mortgage applications to purchase a home, which are less sensitive to weekly rate moves, fell 1 percent for the week, seasonally adjusted, but are 9 percent higher than the same week one year ago.
Lower mortgage rates usually help with affordability, but the tight supply of homes for sale has pushed prices far higher than expected this year. Buyers are turning more to adjustable-rate mortgages, which carry lower interest rates, but some would-be buyers are still being sidelined by the lack of affordable homes for sale. If a home is priced affordably today, it will fly off the shelf in record time with multiple offers.
The National Association of Realtors reports total May sales of existing homes at 10 a.m. ET, Wednesday. Sales have been falling for the past two months, in large part due to higher prices and fewer homes for sale.