Mortgage rates rose again last week, affecting existing borrowers who may have wanted to refinance. However, it appears that demand from homebuyers is on hold at the moment.
The total volume of mortgage applications fell 6.8% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. That’s because the average contract interest rate for 30-year fixed-rate mortgages with matching loan balances ($647,200 or less) increased to 4.80% from 4.50%, with points dropping to 0.56 from 0.59 (including creation fees) For loans with 20% down payment.
“Mortgage rates jumped to their highest level in more than three years last week, as investors continue to appreciate the impact of more restrictive monetary policy from the Federal Reserve,” said Michael Fratantoni, MBA chief economist.
The decline in overall mortgage demand was driven by a 15% weekly drop in refinancing applications. They are now down a whopping 60% from last year. The share of refinancing in mortgage activity decreased to 40.6% of total applications from 44.8% in the previous week.
Mortgage applications to buy a home increased 1% during the week but were 10% lower than the same week a year ago. Homebuyers today still face steep price hikes and record-low supply, as well as rising mortgage rates. Affordability is weakening significantly, but some real estate agents say the competition has not subsided.
“I’ll say I’ve got more cash buyers this year than ever, and they’re borrowing from their parents. They’re only finding that money because they know it’s more competitive with cash offerings,” said Kelly Terriott. McMahon, real estate agent at compass in Dallas.
At an open house held last Sunday, she said buyers are preparing themselves for a bidding war.
“You have to look at it and you know you’re probably going to have to put up $40,000 on the asking price,” said Lauren Bui, a potential buyer touring the house.
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