The number of home loan applications went up by 3.6 percent this week as mortgage rates hit a record low, according to the Mortgage Banking Association.
For the week ended May 9, the seasonally adjusted index of mortgage application activity went up by 3.6 percent, while refinancing applications increased by 6.8 percent. The refinancing activity reached the highest level since April 11, reports Reuters.
While demand for home loans has risen, the activity is still down 12 percent as compared to last year's figures for the same period.
The 30-year average fixed mortgage rate trickled to 4.21 percent from last week's 4.29 percent. The fixed 15-year mortgage rate also plunged to 3.32 percent, 0.6 points down from last week's 3.38 percent.
The five-year adjustable mortgage rate averaged 3.05 percent, remaining largely unchanged from last week's figure. However, the average treasury-indexed adjustable mortgage rate was down 0.4 points to 2.43 percent.
According to Freddie Mac, rates went down on low yields of treasury bonds and a slow economic recovery.
The mortgage rates have been defying expert forecasts. Earlier, analysts had predicted an uptick in interest rates as the Federal Reserve keeps cutting back on its bond-buying scheme. However, a sluggish spring housing market hasn't bolstered interest rates yet.
More underwater homeowners are now qualifying for refinancing, and buyers and builders are both benefiting from the low rates.
"The more rates drop, the more houses people can buy," said Charlie Murphy, president and CEO of IconBuilding Group, to the Chicago Tribune.
"It's less about the gross sale amount and more about what the payments are to maintain the loan."
While demand is increasing, supply has remained largely limited. Experts suggest home buyers to be patient with their dream-home search as they expect better opportunities to come up soon.
"What's the best thing to do right now?" said Perl's Fishman while speaking to the Tribune, "Wait for that dream-home. Don't push that dream-home and revisit your current mortgage situation because there are still wonderful opportunities."
