A real estate sign is pictured in Vienna, Virginia, outside of Washington.
The market enters the historically slow holiday season and an unusual surge in home buying is driving mortgage demand higher. The Mortgage Bankers Association's index shows that the total mortgage application volume rose last week.
The increase was largely driven by applications to purchase a home, which rose 5% for the week but were still 4% lower than a year ago. It was the third-straight week of gains.
Buyers may be rushing in during the holiday season because they are worried that mortgage rates will go up even more than they have already. If rates move much higher, some buyers could be priced out.
The average loan size for a purchase loan increased to $400,000, continuing its run of being mostly above $400,000, according to a release.
Mortgage rates have been going up for the past month and a half. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 3.24% from 3.20%, with points decreasing to 0.36 from 0.43 for loans with a 20% down payment.
The number of mortgage applications to refinance was essentially flat, rising just 0.4% from the previous week. They were 34% lower than a year ago.
The current high growth, high inflation environment is causing the financial markets to ponder the Federal Reserve's policy path in the coming months. Kan said that mortgage rates were higher despite a fair amount of rate volatility. People lock in their mortgages in anticipation of higher rates in the future.
The share of mortgage activity that was refinanced increased to 63.1%.
According to Mortgage News Daily, mortgage rates are more than 10 basis points higher than they were last Friday. The rates are at their highest level in a year.
