Last week, the fear of the Federal Reserve’s reluctance to lower interest rates due to stronger economic data led to a surge in mortgage rates. This, in turn, resulted in a drop in mortgage demand to the lowest level since February’s end. According to the Mortgage Bankers Association, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.91%, with points rising to 0.83 from 0.66 (inclusive of the origination fee) for loans with a 20% down payment. Unfortunately, the rate rose even higher to over 7% according to other daily reads. Consequently, mortgage applications to refinance a home loan, which are most sensitive to rate changes, decreased by 7% last week from the previous week, seasonally adjusted, while application volume was 45% lower than in the same week one year ago. Applications for a mortgage to purchase a home also dropped 3% for the week and 31% lower than the same week a year ago. Unfortunately, with home prices starting to regain steam, mortgage rates higher and inventory levels still well below normal, potential homebuyers are getting hit from all sides on affordability. Current owners are also less inclined to list their homes for sale due to higher rates. However, purchase volume continues to be constrained by the lack of homes on the market. The direction of mortgage rates depends mostly on new reads on the economy, with the latest release being Friday’s government monthly employment report. Michael Fratantoni, MBA’s chief economist, noted that “Application volumes for both purchase and refinance loans decreased last week due to these higher rates.”
Denial of responsibility! VigourTimes 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.
