Mortgage Demand Grows Despite Rates

The Federal Reserve pushed mortgage rates to a four-year high last week and then followed up with a small decrease in rates on Wednesday. The move has increased loan applications for the first time in almost a month by nearly 6%. The federal rate was hiked up a quarter point to 5.25%, the 17th hike since June 2004. The rate last week for a fixed rate mortgage was 6.80%, the highest seen since June of 2002 when rates reached 6.92%.

The number of ARMs had dropped as last week’s index rose, but this week is seeing a revival of the Adjustable Rate Mortgage; applications increased to 29.5% of the total applications, up by almost 5% from last year’s numbers. Refinances decreased by a small percentage, putting purchases on the rise once again. Even with the small rise in applications, most analyst agree that the housing market is stabilizing and may even be in a cooling period expected for the remainder of the year.