Mortgage applications rise for the first time in six weeks despite interest rates rising to 6.25%, signaling housing market ‘volatility’.

The payment: Homebuyers are tired of waiting for the economy to turn around, and with the prospect of more interest rate hikes, they’re starting to buy new homes and refinance their mortgages.

Despite interest rates above 6%, buyer demand has recovered slightly, as reflected in the composite market index, a measure of mortgage application volume, the Mortgage Bankers Association (MBA) said on Wednesday.

The market index rose 3.8% to 264.7 in the week ended September 16. A year ago the index stood at 742.7.

The big picture: Mortgage rates are now at their highest since October 2008. But the prospect of even Higher interest rates and payments could push potential buyers and homeowners into action.

Higher mortgage rates are likely to continue for the rest of the year as the Federal Reserve battles the worst inflation the US has seen in 40 years.

So buyers may be looking for an opportunity to buy now, as opposed to a few months when interest rates and home prices could continue to rise.

“The weekly increase in applications despite higher rates underscores the current overall volatility as well as the previous week’s Labor Day-adjusted results,” said Joel Kan, associate vice president of economic and industry forecasts at the MBA, in a statement.

Key data: The refinancing index rose 10% but was still 83% down year-on-year.

The purchase index – which measures mortgage applications for home purchases – rose 1% from the previous week.

The average contract rate for the 30-year mortgage for homes selling for $647,200 or less in the week ended September 16 was 6.25%. That’s up 6.01% the week before, the MBA said.

For homes that sold for over $647,200, the 30-year average rate was 5.79%. The 15-year-old rose to 5.56%.

The rate on adjustable rate mortgages, which account for 9.1% of all applications, rose to 5.14%.

market reaction: The yield of the 10-year Treasury note TMUBMUSD10Y,
fell below 3.6% in early morning trade.

Do you have thoughts about the housing market? Write to MarketWatch reporter Aarthi Swaminathan at Mortgage applications rise for the first time in six weeks despite interest rates rising to 6.25%, signaling housing market ‘volatility’.

Brian Lowry

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