Mortgage rates have continued their upward climb, resulting in a 6% drop in total mortgage demand compared to the previous week, according to the Mortgage Bankers Association. The average interest rate for 30-year fixed-rate mortgages with conforming loan balances also increased to 7.53% from 7.41%. Applications to refinance a home loan decreased by 7% for the week and were 11% lower than the same week last year, while applications for a mortgage to purchase a home fell by 6% for the week and were 22% lower compared to the same week one year ago. The rapid rise in rates has pushed many potential homebuyers out of the market, with the purchase market slowing down to its lowest level of activity since 1995.
Joel Kan, the MBA’s vice president and deputy chief economist, stated that the recent increase in Treasury yields has contributed to the rise in mortgage rates. As a result, mortgage applications have dropped to the lowest level since 1996. Refinances now account for less than one-third of all mortgage applications, a significant decrease compared to two years ago when they made up about three-quarters of all applications. Additionally, applications for adjustable-rate mortgages (ARMs) have increased, accounting for 8% of purchase applications, up from 6.7% a month ago. The declining demand in the housing market can be attributed to the rapid rate increase, which has made it difficult for many potential homebuyers to enter the market.
Mortgage rates have reached even higher levels, with the average rate on the 30-year fixed hitting 7.72% this week, according to a separate survey by Mortgage News Daily. This increase in rates is fueled by better-than-expected economic data, leading investors to anticipate a more aggressive interest rate policy from the Federal Reserve. As rates continue to rise, the housing market is experiencing significant challenges, resulting in decreased mortgage demand and a slowdown in purchase activity.
