Demand for home loans in the US recovered sharply in the last week, thanks to low fixed mortgage rates, which still hover near all-time lows.
According to a report from the Mortgage Bankers Association (MBA), the total loan applications index, a gauge of mortgage loan application volume, increased 5.8 percent on a seasonally adjusted basis from a week earlier, while applications for refinancing loans increased 6 percent.
The markets had expected that home buyers would become cautious after the Fed’s plan to purchase large quantities of Treasury securities could have an influence on mortgage and bond interest rates.
“Although mortgage rates were little changed following the Federal Reserve’s decision to purchase $600 billion of Treasury bonds over the next eight months, mortgage applications increased last week,” said Michael Fratantoni, Vice President of Research and Economics at the MBA.
The seasonally adjusted Purchase Index rose 5.5 percent from the previous week.
Both the average contract interest rates for 15-year fixed rate mortgages and 30-year fixed rate mortgages were unchanged at 3.64 percent and 4.28 percent, respectively.
“The increases in purchase applications we have seen over the past couple of weeks align with the better than expected news from October’s employment report and other data indicating some improvement in the economy’s growth prospects. Refinance applications increased as rates continued to hover near record lows,” said Fratantoni.