The interest rate severe jump to its top level this year caused a sudden rush in mortgage applications. While that may seem unnatural, there’s a reason: fear that rates will go even higher.
Total mortgage application volume jumped 8.4 percent last week from the previous week, according to the Mortgage Bankers Association. The previous week was adjusted to take the Memorial Day holiday into account.
According to Mike Fratantoni, Chief economist of the Mortgage Bankers Association, “Mortgage application volume rebounded strongly … indicating that the holiday had a larger impact on business activity than originally assumed”.
While higher interest rates make home buying more costly, sudden moves to higher rates often have the instantaneous effect of getting potential buyers to react before they go higher.