Surprising Rise in Mortgage Applications Despite Interest Rate Increase: What’s Driving Homebuyers to Act Quickly?

Despite the rise in interest rates, mortgage applications have seen an increase for two consecutive weeks, according to data from the Mortgage Bankers Association. The volume of mortgage loan applications increased by 3.3% for the week ending April 12, even as the 30-year fixed-rate mortgage reached 7.13%, its highest level in months.

Joel Kan, Vice President of MBA, stated that although borrowers were eager to apply for loans despite the rise in rates, it was possible that they were doing so before rates climbed even higher. The strong economy and persistent inflation were factors motivating homebuyers to act quickly.

Despite this, refinancing applications also saw a slight uptick during this period. The majority of the increase in application volume came from purchases, which are still below last year’s levels by 10%. However, Federal Reserve officials are considering keeping interest rates elevated for a longer period due to the stubborn inflation rates. Despite this news, homebuyers remained undeterred and continued to apply for mortgages at a higher rate.