Last week, mortgage applications increased by 2.6%, thanks to the first decline in borrowing costs in three weeks. The average 30-year fixed-rate mortgage dropped to 7.18% in the week ending on May 3, according to data from the Mortgage Bankers Association (MBA). This decrease in rates was attributed to a slowing job market, with wage growth at its slowest pace since 2021.

The Federal Housing Administration (FHA) also saw an increase in applications, leading to a 2% rise in purchase activity for the week. FHA-backed 30-year fixed-rate mortgages fell to 6.92%, marking a decline for the first time in three weeks.

Mike Fratantoni, MBA senior vice president and chief economist, emphasized the importance of government lending programs for first-time homebuyers, who account for around half of purchase loans.

In addition to the rise in purchase activity, more homeowners applied to refinance their loans, with a 5% increase in refinance applications as shown by the MBA data.

Fratantoni highlighted how government lending programs play a vital role in providing financing options for first-time homebuyers.

Overall, last week’s data suggests that despite higher interest rates and economic uncertainty, home buying and refinancing continue to be popular choices for many Americans.