A stronger-than-expected employment report helped push average mortgage rates higher this week as the Federal Reserve policy makers are expected to start raising short-term rates at the December meeting.
Buyers are typically purchasing more expensive homes as prices increase in areas where supplies are most suppressed.
Buying a home is 23 percent cheaper than renting nationwide for millennials — “and now is the best time to buy since 2012 when interest rates were a tad lower.”
Sales of existing homes showed renewed strength in September following a disappointing and surprising decline in August, but have now increased year–over–year for 12 consecutive months.
A strengthening labor market and mortgage rates still at historic lows, hovering at about 4 percent, are contributing to higher demand for new homes.
Applications for both the purchase of a home and refinancing existing loans soared 25 percent last week, compared to the previous week — mostly because of anxiety over new mortgage-closing regulations taking effect Oct. 3.
The refinancing portion of mortgage applications soared 18 percent, while applications for the purchase of a home increased a solid 9 percent from one week earlier to its highest level since June 2015.
By leaving the key rate as is, the Fed is maintaining economic growth by preserving the current low cost of credit for consumers and businesses.
That new rate brings joblessness close to what the Fed considers full employment. That’s not much comfort for tens of millions of workers still looking for higher wages and full-time positions.
The refinance component of the bankers’ overall index increased 17 percent from the previous week to its highest level since April 2015.