Arlington, Virginia, July 13, 2023 – A captivating house waits to be sold.
Saul Loeb | AFP | Getty Images
The real estate market is experiencing a surge in mortgage rates, reaching new heights last week. Consequently, overall demand for mortgages declined by 6% compared to the previous week, according to the Mortgage Bankers Association’s adjusted index.
Fixed-rate mortgages with conforming loan balances ($726,200 or less) witnessed an increase in the average contract interest rate from 7.41% to 7.53%. Points also rose from 0.71 to 0.80 (including the origination fee) for loans with a 20% down payment. This is in stark contrast to the 6.75% rate that was observed in the same week the previous year.
Joel Kan, the MBA’s vice president and deputy chief economist, explained, “Mortgage rates continued to rise last week due to the impact of increased Treasury yields. This caused mortgage applications to decline significantly, dropping to their lowest level since 1996.”
Refinancing a home loan saw a 7% decrease in applications for the week, with a year-on-year drop of 11%. Refinances now make up less than one-third of all mortgage applications, in contrast to two years ago when they accounted for approximately three-quarters of applications, during a period of record low rates.
Meanwhile, applications for mortgages to purchase homes experienced a 6% decline for the week and were 22% lower compared to the same week the previous year.
Discussing the decline in purchase activity, Kan stated, “The rapid increase in interest rates forced many potential homebuyers out of the market, resulting in the lowest level of purchase activity since 1995.” Kan also noted that there was an increase in adjustable-rate mortgage (ARM) applications, making up 8% of purchase applications, up from 6.7% a month ago, when interest rates were slightly lower. ARMs offer lower rates, but their fixed term is shorter, usually five or 10 years.
In addition, the Mortgage News Daily’s daily survey on mortgage rates revealed that the average rate for the 30-year fixed-rate mortgage climbed even higher this week, reaching 7.72% on Tuesday. This increase is believed to be due to positive economic data, which may lead to a more aggressive interest rate policy by the Federal Reserve.
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
