The Fed interest rate is increasing and borrowers are trying to make the best of it before it happens and most of them rushed in to apply last week.
The number of applications also rose by 1.2 percent on a seasonally adjusted basis last week from the previous week according to a report made by Mortgage Bankers Associations, says CNBC.
The increase is set to be announced by The Federal Reserves next week when they meet. It is going to be the first time in nine years.
Another factor seen that boosted the increase in application is the refinance volume. Application has increased by four per cent in the last week and overall, it is higher compared to last year even when the intereset rates then were lower.
What's surprising is that applications to buy a home were on the flat line, although up by 0.04 per cent a week before. But, good news is that the purchase volume is 290 per cent higher on the same week compared to the same timeline a year ago. It could be a good indication of a better and more consistent home sales to come.
CNBC adds that survey of consumer sentiments done monthly by Fannie Mae found a tiny improvement in participants saying "now is a good time to buy, despite challenges in affordability and tight supply of homes for sale."
"This year's housing market is poised to be the best since 2007; however, consumers' ability and willingness to purchase a home is likely to remain an issue in many regions going forward until we see consumer confidence in their income growth consistently gain traction," Fannie Mae chief economist Doug Duncan wrote in the report.
Overall, the average agreement on interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.14 percent from 4.12 percent, with points decreasing to 0.43 from 0.50 for 80 percent loan-to-value ratio loans, CNBC concludes.
