The Mortgage Bankers Association (MBA) announced a 2.6% increase in mortgage applications last week, primarily due to the first decline in borrowing costs in three weeks. During the week ending on May 3, the average 30-year fixed-rate mortgage dropped to 7.18%. This decrease 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%, resulting in a 2% rise in purchase activity for the week. FHA-backed 30-year fixed-rate mortgages fell to 6.92%, marking the first decline in three weeks. Mike Fratantoni, MBA senior vice president and chief economist, highlighted the importance of government lending programs for first-time homebuyers, who account for around half of purchase loans.
Moreover, there was a significant increase in refinance applications, up by 5%, as shown by MBA data. Fratantoni emphasized the significance of government lending programs in providing financing options for first-time homebuyers and those looking to refinance their current mortgages.
The decline in borrowing costs has contributed significantly to the increase in mortgage applications and refinance activity, as more homeowners are taking advantage of lower interest rates to secure financing for their homes or refinance their existing mortgages.
Overall, this latest trend suggests that government lending programs play a crucial role in promoting homeownership and supporting the housing market during times of economic uncertainty or slower job growth.