Getty Images Mortgage demand continues to weaken, still around a 22-year low, but there was a sign in the weekly numbers that first-time buyers may be slowly coming back. Home mortgage applications fell 1% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Sales volume was 21% lower than the same week a year ago. There has, however, been a jump in demand for loans that offer lower down payments. “Last week’s purchase results were mixed, with contract applications down 2% and government applications up 4%, potentially a sign of more first-time homebuyer activity,” said Joel Kan, MBA economist . He also noted that the average purchase loan size continued to move lower as the housing market at the top of the market weakens. Mortgage rates rose across all loan types last week. The average contract rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) rose to 5.65% from 5.45%, with units climbing to 0.68 from 0.57 (including origination fee ) for loans with a 20% down payment. As a result of the sharp rise in interest rates, demand for loan refinances fell 3% for the week and was 83% lower than the same week a year ago. Borrowers have also turned away from adjustable-rate loans, which no longer offer the opportunities they did just a few months ago. “The spread between fixed-rate mortgages and ARMs narrowed to 84 basis points from over 100 basis points last week,” Kan said. “This move made fixed-rate loans relatively more attractive than ARMs, thereby reducing ARM share further from the highs seen earlier this year.” Mortgage rates moved even higher to start this week as the stock market sold off on renewed recession fears. Investors are awaiting what they expect to be hawkish sentiment from the Federal Reserve at a meeting later this week in Jackson Hole, Wyoming.
