Mortgage applications jumped 4% last week but were 38% lower than a year ago. As rates fall, the annual comparison shrinks.
Moderation in home-price rise and additional falls in mortgage rates may encourage more buyers to return to the market, an MBA economist said.
Lower rates have reduced demand for ARMs. ARM applications declined to 7.7% last week from 13% in October when rates were higher. ARMs offer lower rates but at a higher risk because they adapt to the market rate after their fixed maturities.
Mortgage rates fell after Tuesday’s CPI report, but they could move again Wednesday after the Fed announces its latest rate hike and Fed Chair Jerome Powell speaks.
“A friendly Fed might easily shatter the range, but we have our reservations about how much fuel the Fed will throw to the fire,” said Mortgage News Daily’s Matthew Graham. The Fed may try to moderate excitement because it’s harmful to its goals.
