Mortgage demand rises again even as interest rates increase

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A key measure of home-purchase applications rose again last week even as mortgage rates ticked higher.

The Mortgage Bankers Association's (MBA) index of mortgage applications rose 3.7% for the week ended Jan. 19, compared with one week earlier, according to new data published Wednesday. 

The data also showed that the average rate on the popular 30-year loan started the year at 6.78%. While that is down from a peak of 8% in October, it is slightly higher than it was the previous week.

«Mortgage rates increased slightly last week, but there continues to be an upward trend in purchase activity,» said Joel Kan, MBA's deputy chief economist. 

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Available home supply remains down a stunning 34.3% from the typical amount before the COVID-19 pandemic began in early 2020, according to a recent report from Realtor.com. (David Paul Morris/Bloomberg via / Getty Images)

The rise in mortgage rates has done little to cool housing demand at the start of the new year. Applications for a mortgage to purchase a home climbed 8% from one week earlier, although volume is down 18% compared with the same time last year.

However, demand for refinancing moved lower last week, falling 7% from the previous week, according to the survey. Compared with the same time last year, refinance applications are down about 8%.

«Refinance applications declined over the week and remained at low levels,» Kan said. «There is still little incentive for homeowners to refinance with rates at these levels.»

MORTGAGE RATES