US mortgage demand rises 2.2% as interest rates decline slightly

US mortgage applications rose 2.2 per cent last week compared with the previous week, prompted by a slight decline in interest rates, according to the Mortgage Bankers Association’s seasonally adjusted index.

Refinance applications, which are usually most sensitive to weekly rate moves, rose 2 per cent for the week but were still 86 per cent lower than the same week one year ago, CNBC reports.

Even with interest rates now back from their recent high of 7.16 per cent a month ago, there are precious few who can still benefit from a refinance — just 220,000, according to real estate data firm Black Knight.

“The decrease in mortgage rates should improve the purchasing power of prospective homebuyers, who have been largely sidelined as mortgage rates have more than doubled in the past year,” Joel Kan, an MBA economist, said in a release. “With the decline in rates, the ARM share [adjustable-rate] of applications also decreased to 8.8 per cent of loans last week, down from the range of 10 per cent and 12 per cent during the past two months.”

Mortgage rates haven’t moved at all this week, as the upcoming Thanksgiving holiday tends to weigh on volumes.

“It’s not that things aren’t moving. They just aren’t moving like normal,” said Matthew Graham, chief operating officer at Mortgage News Daily. “Expect things to get back closer to normal next week, but for the market to continue to wait until December 13 and 14 for the biggest moves.”

That’s when the government releases its next major report on inflation and the Federal Reserve announces its next move on interest rates.