Holiday Homebuying Surge Boosts Mortgage Demand

As the U.S. housing market enters a typically slow holiday period, an unusual surge in homebuying is driving up mortgage demand, CNBC reports. Applications to purchase a home rose for the third week in a row, causing a subsequent 1.8% increase in mortgage application volume last week.

As more buyers are priced out of a historically competitive housing market, a boost in homebuying activity is likely attributed to concern over rising mortgage rates, which could further reduce affordability.

Buyers may be rushing in during the usually slow holiday season because they are concerned that mortgage rates will move even higher than they have in the past month. Given how expensive homes are today, some buyers could be priced out if rates move much higher.

“The financial markets continue to discern the Federal Reserve’s policy path in the coming months in light of the current high growth, high inflation environment. Despite a fair amount of rate volatility last week, mortgage rates were higher,” said Kan, MBA’s associate vice president of economic and industry forecasting. “Borrowers continue to lock in mortgages in anticipation of higher rates in the future.”

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