Many perceived that higher mortgages rates in 2016 would result in a decrease of mortgage applications. But on the contrary, mortgage rates actually declined even further last week - causing a spike in the volume of the mortgage market.
According to the Mortgage Bankers Association, total applications saw an increase of 8.8 percent on a seasonally adjusted basis just last week, in comparison to its previous week.
Refinance applications have attributed to the spurt, seeing an increase of 11 percent from its previous week, also seasonally adjusted, including Martin Luther King Jr. Day.
As it turns out, buyers looking for financial help are making the most of their last opportunity to grab the lowest rates. Yahoo Real Estate reports:
"Borrowers are clearly seeing the rate drop as perhaps a last opportunity to seize on historically low rates. Refinance volume is still down 30 percent from the same week a year ago, when mortgage rates were even lower. Most economists predict that interest rates will rise steadily through 2016, although plunging equity markets in the U.S. and overseas have trumped that premise so far."
"As a result of more financial market volatility and continued flight to quality by investors, mortgage rates have decreased 18 basis points since the first week of January 2016," explained Joel Kan, an MBA economist.
He continued, "With a 30-year fixed rate of 4.02 percent in the most recent week, the refinance index was at its highest since the week ending October 1, 2015, a week when rates were 3.99 percent, and there was a rush of applications before the Know Before You Owe rule implementation deadline."
Mortgage applications in purchasing a home saw a 5 percent increase on a week-to-week, seasonally adjusted basis. They were also 22 percent higher than the same week a year earlier.
A lacking inventory of homes for sale and fast-rising prices have been the biggest hurdles home buyers are facing in the current market, which makes them "less sensitive to weekly rate moves. "