Mortgage demand spiked markedly higher last week as consumers returned from the holidays to find overall lower interest rates and then a sharp rate drop Friday on news from the White House.
President Donald Trump posted on social media late Thursday that, in an effort to lower mortgage rates, he would order mortgage giants Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed bonds. Just on that news, the average rate on the 30-year fixed sunk briefly below 6% Friday morning before bouncing slightly higher again, according to Mortgage News Daily.
As a result, total mortgage application volume jumped 28.5% last week from the previous week, which was adjusted for the holiday, according to the Mortgage Bankers Association’s (MBA) seasonally adjusted index.
For the whole week, on the MBA’s survey, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, decreased to 6.18% from 6.25%, with points decreasing to 0.56 from 0.57, including the origination fee, for loans with a 20% down payment.
“Rates started to come down a little just before that, and part of it might be a bounce back from the holidays, even though we did adjust for the holiday in the results the week before. It’s always a noisy time,” said Joel Kan, an MBA economist, adding, “This was a real move based upon the rate drop. Spreads had been moving in even before the announcement.”
