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Rising mortgage rates don't seem to be scaring off home buyers. Mortgage applications to purchase a home, viewed as a gauge of homebuying demand, increased 2% last week, the Mortgage Bankers Association reported Wednesday.
Homebuilders are reporting stronger buyer traffic too after a brief lull earlier this fall, according to a recent builder sentiment report released by the National Association of Home Builders.
“Purchase applications increased for both conventional and government loan segments, as housing demand continues to show resiliency at a time—late fall—when homebuying activity typically slows,” says Joel Kan, the MBA’s associate vice president of economic and industry forecasting. “The second straight increase in purchase applications suggests that stronger sales activity may continue in the weeks to come.”
Still, purchase applications for mortgages are 6% lower than the same week a year ago, when the housing market was even more unseasonably lively.
Mortgage rates are at their highest level in more than three weeks and continued to move higher at the start of this week, the MBA reports. The average contract interest rate for 30-year fixed-rate mortgages last week rose to 3.20%, up from 3.16% the previous week, the MBA reports. As rates rise, refinance demand has plummeted and is 31% lower than the same week a year ago.