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BofA sees increased home buying due to more inventory,

lower

bond yields

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U.S. 10-year bond yield drop boosts mortgage applications

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UWM Holdings ( UWMC ) anticipates higher mortgage demand, expands

workforce

By Saeed Azhar

NEW YORK, March 27 (Reuters) - Bank of America ( BAC )

saw an 80% jump in mortgage applications between January and

March, its executive of consumer lending said, as buyers were

tempted by increasing home inventory and lower long-term bond

yield.

"We're seeing a steady increase in home buying activity, and

it's beyond what we would normally see from a seasonality

perspective," Matt Vernon, head of consumer lending at the

second-biggest U.S. lender, told Reuters. "We've seen an 80%

increase in our applications from January to now, and normally

we would see around the 60% increase."

The drop last fall in U.S. 10-year bond yields, which is a

benchmark for mortgage rates, encouraged more buyers to return

to the market, he said.

The yield dipped to about 3.6% in September, the lowest

since June 2023, which pushed down the 30-year mortgage rate

to 6.1% in early October. The interest rate on a

30-year mortgage is currently at 6.7%, still below the 7% a year

earlier, according to LSEG's data based on the Mortgage Bankers

Association's average fixed 30-year contract rate.

"We're seeing more inventory come into the market, which

ultimately leads to some stability and ultimately growth from a

mortgage perspective," BofA's Vernon said.

"With rates remaining steady or slowly declining, we are

seeing more demand from a buyer perspective than we saw in the

previous years."

Interest in mortgage refinancing is also picking up, but about

80% of the bank's mortgages currently have interest rates below

6%, so mortgage rates would have to slide further below that to

spur more demand.

"Below 6% we would see very meaningful pickup from a rate

perspective," he said.

U.S. existing home sales unexpectedly increased in February as

rising supply pulled buyers back into the market.

A Reuters poll of property experts in February showed

affordability in the U.S. housing market will improve modestly

in the coming year, based on expectations for a few more

interest rate cuts, not an increase in homes available to

purchase.

Mortgage lender UWM Holdings ( UWMC ) also expects higher

demand for new mortgages and refinancing, Chief Strategy

Officer, Alex Elezaj told Reuters.

"People are feeling, in general, good about the economy, I

feel like they think that things have stabilized obviously

post-election," he said.

"People are realizing... rates could go up, they could go

down, but it's still a good time for me to explore what my

options are."

UWM projects it will originate $28 billion to $35 billion in

mortgages and refinancing originations in the first quarter, up

from $27.6 billion a year earlier.

The company hired more employees to handle the projected

surge in business. Its headcount swelled to 9,100 by the end of

2024, from around 6,700 a year earlier, it said.

"We are operationally prepared across the board to handle

pretty much double the volume," Elezaj said.