First, a decline in borrowing costs drove a 2.6% increase in mortgage applications last week. This was due to the average 30-year fixed-rate mortgage dropping to 7.18% in the week ending on May 3, according to data from the Mortgage Bankers Association (MBA). The slowing job market and wage growth at its slowest pace since 2021 were attributed to this decrease in rates.
Applications for Federal Housing Administration (FHA) 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 a 5% increase in refinance applications as shown by the MBA data. Fratantoni emphasized the significance of government lending programs in providing financing options for first-time homebuyers.
In summary, mortgage applications saw an increase driven by lower borrowing costs and government lending programs that provide financing options for first-time homebuyers.
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