H
omebuyers are becoming more accepting of higher borrowing costs, as evidenced by a surge in mortgage applications, particularly for FHA loans. Despite recent increases in mortgage rates, home sales and applications are on the rise.

    Economists attribute this trend to buyers giving up hope for significant dips in interest rates and deciding to move forward with their purchases. Mortgage applications to buy homes increased 2% last week, with a notable jump in FHA loan applications, which tend to be popular among first-time homebuyers and those with lower incomes.

    The loosening of inventory in some markets has allowed potential buyers to take advantage of increasing supply and lower FHA rates, which have decreased slightly compared to conforming 30-year fixed rates. Existing-home sales saw a yearly gain for the first time in over three years, rising 3.4% month-over-month in October.

    The 30-year fixed-rate mortgage averaged 6.84% this week, fluctuating within the 6% range over the past few months. While still lower than last year's highs of around 8%, rates are higher than they were a few years ago. Economists believe that consumers are adapting to these new rates and may be accepting 6% or 7% as the norm.

    As homeowners become more willing to sell, driven by life milestones such as job changes, marriages, and family planning, the "lock-in" effect of holding onto low mortgage rates will likely decrease. This shift could lead to increased home sales, fueled by a growing economy and rising housing inventory.