H
omebuyers are taking advantage of the lowest mortgage rates in three months, but that momentum may be short-lived as rates begin to rise again. According to the Mortgage Bankers Association's latest report, home buyers jumped at the opportunity to lock in low rates during the week ending July 4, leading to a 9% increase in mortgage applications for home purchases compared to the previous week.

    This surge in demand is being fueled by increasing housing inventory and moderating home-price growth, says Joel Kan, MBA's deputy chief economist. Existing homeowners are also taking advantage of low rates, with refinancing applications up 56% from last year.

    However, the latest mortgage rate averages show a climb after five weeks of declines. The 30-year fixed-rate mortgage rose to 6.72%, according to Freddie Mac. Sam Khater, Freddie Mac's chief economist, attributes this increase to a stronger-than-expected jobs report.

    Despite ongoing affordability challenges in the housing market, home purchase and refinance applications are responding to the downward trajectory of rates. The average loan size on a mortgage application for a home purchase fell to $432,600, the lowest since January, MBA reported. Freddie Mac's national averages for the week ending July 10 show:

    * 30-year fixed-rate mortgages averaging 6.72%, up from last week's 6.67% and down from 6.89% a year ago.

    * 15-year fixed-rate mortgages averaging 5.86%, up from last week's 5.80% and down from 6.17% a year ago.