As Mortgage Rates Fall, Application Rebound

Mortgage applications rose for the first time in more than a month as borrowing costs fell last week, showing how quickly home buyers will react to even minor changes in mortgage rates. The 30-year fixed-rate mortgage fell to a 6.88% average this week,

Evidence that purchase demand remains sensitive to interest rate changes was on display this week, as applications rose for the first time in six weeks in response to lower rates, Mortgage rates continue to be one of the biggest hurdles for potential home buyers looking to enter the market.

Mortgage applications for purchasing a home—a gauge of future homebuying activity—climbed 11% last week compared to the previous week. Purchase volume, particularly for FHA loans, was up strongly, again showing how sensitive the first-time homebuyer segment is to relatively small changes in the direction of rates, Other sources of housing data are showing increases in new listings, which is a real positive for the spring buying season given the lack of For Sale inventory.

In our local market, latest housing report shows a nearly 12% jump in listings in February compared to a year earlier. Most of that uptick is occurring in lower price points: The number of listings priced between $100,000 and $225,000 rose by about 18% compared to a year ago, outpacing other price categories, and a huge jump for buyers looking on that price range.

The first couple of months of 2024 have proven to be positive for inventory levels, as the number of homes actively For Sale was at its highest level since 2020. While the country is still well below pre-pandemic levels, Northeast Ohio has seen month-over-month inventory gains, as well as overall equity gains for homeowners.

As of 3/8/24, here are the most recent mortgage rates:

• 30-year fixed-rate mortgages: averaged 6.88%, falling from last week’s 6.94% average. Last year at this time, rates averaged 6.73%.