Economic uncertainty? Nobody cares apparently.
At least that’s what happened last week when mortgage demand made an unexpected rise. Both purchases and refinances increased 11% on a seasonally adjusted basis from the week before, according to data from the Mortgage Bankers Association (MBA) weekly survey.
Refinances were 51% higher than the same week a year ago. Purchases were 13% higher than a year ago. All of that was puzzling given a week of mostly bad news on the economic front, said Mike Fratantoni, MBA’s chief economist, in a statement.
“The economic news last week included a negative reading for first-quarter (gross domestic product) growth and further signs of contraction in the manufacturing sector, mixed with a solid employment report for April,” Fratantoni said.
Despite that, homebuyers hit those open houses. “Conventional purchase application volume increased 13% and was up 9% from year-ago levels, a surprisingly strong move given lingering economic uncertainty,” Fratantoni said.
Interest rates did decline slightly last week and have remained under 7% for most of this year. “With rates moving lower, refinance volume increased 11%, led by VA refinance applications, which were up 26%,” Fratantoni said.
The refinance share of mortgage activity decreased to 37.1% of total applications from 37.3% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.3% of total applications.
The Federal Housing Administration share of total applications decreased to 16.4% from 16.7% the week prior. The U.S. Department of Veterans Affairs share of total applications increased to 13.3% from 13.1% the week prior. The U.S. Department of Agriculture share of total applications decreased to 0.5% from 0.6% the week prior.
