Recently, mortgage interest rates reached a high not seen since 2000. Because of this, mortgage demand is very close to a 27-year low.
The seasonally adjusted indicator from the Mortgage Bankers Association shows that the total number of mortgage applications dropped 1.3% last week compared to the week before. Volume decreased by 25.5% from the same week last year.
For loans with a 20% down payment, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) went from 7.31% to 7.41%, while the number of points (including the origination fee) decreased from 0.72 to 0.71. Prior to one year, the rate was 6.52%.
The rate on a 30-year fixed jumbo mortgage jumped to 7.34%, the highest in the MBA’s jumbo rate series’ history going back to 2011.
The Federal Open Market Committee is referred to by MBA economist Joel Kan. “”Based on the FOMC’s most recent projections, rates are expected to be higher for longer, which drove the increase in Treasury yields,” he said. “Overall applications decreased as homeowners and potential homebuyers continued to feel the effects of these high rates,”
Refinancing requests for mortgages decreased 1% for the week and were 21% lower than they were a year earlier. There are now very few borrowers with mortgage rates high enough to profit from a refinance after record-low interest rates during the early years of the epidemic and a refinance boom.
Mortgage loan applications decreased by 2% for the week and were 27% lower than they were for the same week last year.
An unprecedented combination of historically limited housing supply, rising interest rates, and rising property prices presents an unfavorable situation for prospective purchasers. Although usually higher interest rates have a negative impact on home prices, the current imbalance between supply and demand is driving prices up even as more and more purchasers are unable to afford a home.
Another study from Mortgage News Daily found that interest rates increased this week. According to another study this week, even newly constructed home sales, which had been increasing because of the lack of inventory on the resale market, suffered in August. Sales decreased by about 9% in August compared to July’s rate, reaching their lowest point since March.