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Just when the housing market was starting to fall into a seasonal pattern, mortgage demand takes off. Mortgage applications to purchase a home—a gauge of the housing market—rose 7% last week compared to the previous week, the Mortgage Bankers Association reported Wednesday. That marks the highest level since April of this year.
Housing inventories have increased slightly, which may be opening up more possibilities to home buyers who had felt shut out. Also, a new report shows that bidding wars are easing, which also may be an incentive for buyers to come back in the hopes they’re facing less competition.
Still, mortgage applications for home purchases are 11% lower than the same week one year ago. But that does represent the smallest annual decline in 14 weeks, MBA reports.
Home prices continue to climb, which is reflected in mortgage applications too, MBA economist Joel Kan notes. “Both conventional and government purchase applications increased,” he says. The average loan size for a purchase application rose to $396,800.
“The very competitive purchase market continues to put upward pressure on sales prices,” he says.
Mortgage rates remain historically low, offering home buyers some savings from the higher prices. The average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances was 3.03% last week, MBA reports.