The Fed raised short-term rates by 25 basis points, but the move barely affected long-term rates – the average contract interest rate on 30-year fixed mortgages only rose 1 basis point to 4.16%, and rates on 15-year fixed-rate mortgages were 7 basis points higher to 3.45%, the highest level since October 2014.
“Borrowers may have been spurred to act by the potential for future rate increases from the Fed, which are more likely to be reflected in higher mortgage rates over time,” Mike Fratantoni, the association’s chief economist, told CNBC.
Moreover, lenders are making it easier for borrowers to qualify. Ellie Mae, a mortgage analytics company, calculated that the average FICO score on all closed loans dipped to 721, the sixth-consecutive monthly decline and 18 points lower year-over-year.
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Max Chen contributed to this article.