In the week ending on May 3, mortgage applications saw a 2.6% increase, driven by the first decline in borrowing costs in three weeks. The average 30-year fixed-rate mortgage dropped to 7.18%, according to data from the Mortgage Bankers Association (MBA). This decrease in rates was attributed to a slowing job market, with wage growth at its slowest pace since 2021.
FHA-backed loans also went up by 5%, leading to a 2% increase in purchase activity for the week. FHA-backed 30-year fixed-rate mortgages fell to 6.92%, marking a decline for the first time 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 also an increase in refinance applications, with a 5% rise shown by MBA data. Fratantoni emphasized that government lending programs play a crucial role in providing financing options for homeowners seeking to refinance their loans and take advantage of lower interest rates.
Overall, this positive trend in mortgage applications can be attributed to both declining borrowing costs and government lending programs aimed at helping first-time homebuyers and existing homeowners alike achieve their financial goals related to housing ownership and refinancing existing mortgages.