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Last week, mortgage applications rose by 2.6%, fueled by the first decline in borrowing costs in three weeks. The average 30-year fixed-rate mortgage dropped to 7.18% in the week ending on May 3, according to data from the Mortgage Bankers Association (MBA). This decrease in rates was attributed to a slowing job market, with wage growth at its slowest pace since 2021.
Applications for Federal Housing Administration (FHA) loans also increased by 5%, leading to a 2% rise in purchase activity for the week. FHA-backed 30-year fixed-rate mortgages fell to 6.92%, marking a decline for the first time in three weeks. Mike Fratantoni, MBA senior vice president and chief economist, highlighted the significance of government lending programs for first-time homebuyers, who account for around half of purchase loans.
Moreover, there was a 5% increase in refinance applications last week, as shown by MBA data. Fratantoni emphasized the importance of government lending programs in providing financing options for first-time homebuyers. With interest rates dropping and more people applying for mortgages, it appears that the housing market is slowly recovering from its recent slump.