The sharp rise in mortgage interest rates over the past few weeks has had an impact on mortgage demand. According to the Mortgage Bankers Association’s Seasonal Adjustment Index, the total number of applications last week was down nearly 7% compared to the previous week.
The average contract interest rate for 30-year fixed-rate collaterals with a loan balance ($ 548,250 or less) increased from 3.10% to 3.14%, for loans with a 20% reduction from 0.34 to 0.35 (with basic charges). This is the highest level since July.
Refinancing demand, which is particularly sensitive to weekly interest rate movements, fell 10% last week to a three-month low. The volume was 16% lower than the same week a year ago.
“Higher rates are reducing the incentive for borrowers to refinance, as all types of loans have seen a decline,” said Joel Kahn, associate vice president of financial and industry forecasting at the MBA.
Mortgage applications for home purchase declined 2% a week, down 13% from the same week a year ago. This was due to a decline in traditional loan applications. Demand for government debt, which is used by low-income borrowers, increased by 1%.
“But still ते 410,000 was not enough to reduce the average debt balance. Home appreciation and selling prices have soared, applications for higher balances, traditional loans still dominate the mix of activities, ”Kan added.
Rates lagged a bit to start this week, but then went up again on Tuesday. The bond market, which determines daily rate movements, reacted to economic data.
Matthew Graham, chief operating officer of Mortgage News Daily, said: “When bonds lose enough land in the middle of the trading day, mortgage lenders occasionally make mid-day adjustments in their rate offers.”
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