Mortgage applications were on the rise last week a new survey finds most Americans are predicting a decline in mortgage rates this year.
The Mortgage Bankers Association’s (MBA) Market Composite Index was up by 3.7% on a seasonally adjusted basis from one week earlier while the unadjusted index was up by 8%. The seasonally adjusted Purchase Index dipped by 1% from one week earlier while the unadjusted index rose by 6% — although the latter was also 19% lower than the same week one year ago.
The Refinance Index increased 12% from the previous week and was 1% higher than the same week one year ago. The refinance share of mortgage activity increased to 35.4% of total applications from 34.2% in the previous week.
Among the federal programs, the FHA share of total applications decreased to 13.1% from 13.8% while the VA share of total applications increased to 14.1% from 13.3% and the USDA share of total applications remained unchanged at 0.4%.
Separately, the Fannie Mae (OTCQB: FNMA) Home Purchase Sentiment Index increased 3.5 points in January to 70.7, its highest level since March 2022. An all-time survey-high of 36% of respondents said they expected mortgage rates to go down in the next 12 months – although only 17% of consumers believed that now is a good time to buy a home.
“Mortgage rate optimism increased markedly again in January, with a survey-high percentage of consumers anticipating mortgage rate declines over the next year,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “For the first time in our National Housing Survey’s history, a greater share of consumers believe mortgage rates will decrease over the next year, rather than increase. Consumers also expressed greater confidence in their job situations this month, another sign that housing sentiment may continue to improve in 2024.”
