According to data released by the Mortgage Bankers Association (MBA) on Wednesday, the overall market composite index, measuring the volume of mortgage loan applications, increased by 9.9% last week, reaching 190.6. Compared to the previous year's 186.7, this index has shown growth.

Specifically, there has been an increase in both home purchase and refinancing demands. The index for home purchase mortgage loan applications rose by 5.6% last week, reflecting an increase in housing demand. Meanwhile, refinancing activities saw a substantial increase, with the refinancing index rising by 18.8%, including a nearly 30% increase in refinancing of government-supported loans.

For the week ending on January 5th, the average contract interest rate for 30-year home mortgages with a sale price of $726,200 or less was 6.81%, up from 6.76% the previous week. In contrast, for jumbo loans exceeding $726,200, the 30-year home mortgage interest rate was 6.98%, higher than the previous week's 6.86%.

Furthermore, the average interest rate for 30-year mortgages supported by the Federal Housing Administration increased from 6.51% to 6.56%; the average interest rate for 15-year mortgages rose from 6.26% to 6.41%; and the interest rate for adjustable-rate mortgages increased from 5.71% to 6.17%.

This trend suggests that despite the rise in interest rates, both home purchase and refinancing demands have not been suppressed. Homebuyers seizing opportunities post-holidays have contributed to the increased demand for home purchases. On the other hand, some homeowners are taking advantage of refinancing opportunities to secure lower interest rates. While the increase in home purchase demand is modest, the sustainability of homeowner interest remains uncertain as interest rates continue to rise.

However, despite the increased demand, housing inventory remains constrained. Many homeowners opted to continue holding onto their homes due to previous low-interest rates, resulting in relatively low supply in the market. Even if homebuyers are willing to bear higher interest rates, they face the challenge of limited supply.

Joel Kan, Vice President and Deputy Chief Economist at MBA, stated in a release, "The increase in purchase and refinance applications for both conventional and government loans is promising at the start of the new year, but this is likely driven by some catch-up activity after the holiday season and the end-of-year drop in rates." He added that mortgage rates and application volumes have been fluctuating in recent weeks, and overall activity remains relatively low.