Mortgage applications rise for the first time in 6 weeks as buyers hurry into the housing market before the Fed's next rate hike
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- Weekly applications for mortgages rose for the first time in more than a month, the Mortgage Bankers Association said Wednesday.
- Applications rose 3.8% last week after plunging 29% in the prior week.
- Mortgage demand rose as people prepared for the Federal Reserve's next rate hike.
Weekly applications for mortgages stepped higher for the first time in more than a month as people positioned for home purchases before the Federal Reserve issues its next rate hike, according to figures from the Mortgage Bankers Association.
Mortgage applications rose 3.8% in the week ended September 16 from a week earlier, the industry group said Wednesday.
Demand increased for the first week in six as the 30-year fixed rate climbed 24 basis points to 6.25%, the highest rate since October 2008. A week earlier, the fixed rate pushed beyond 6% for the first in 14 years.
Mortgage rates have followed Treasury yields higher. The 10-year Treasury yield this week rose above 3.5% for the first time since 2011. The yield was 3.57% ahead of the Fed's policy decision. The central bank led by Chair Jerome Powell this year has raised interest rates four times, pushing its benchmark to a range of 2.25% to 2.5%.
The Fed's latest policy decision is due Wednesday afternoon, and investors widely expect a third consecutive increase of 75 basis points in the fed funds rate.
"The weekly gain in applications, despite higher rates, underscores the overall volatility right now as well as Labor Day-adjusted results the prior week," Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Bankers Association, said in a statement.
Housing demand plunged 29% in the previous week, which accounted for the Labor Day holiday.
While there was an increase in the latest round of applications, purchase applications have dropped by 30% from a year ago, and refinance activity has slumped by 83%.
The MBA's latest update report arrived the same day the National Association of Realtors said sales of existing homes fell 0.4% in August, marking a ninth straight month of declines.