Mortgage demand last week fell to nearly half of what it was a year ago as interest rates hit a 21-year high, according to the Mortgage Bankers Association.
Overall, mortgage demand is at its lowest level since 1997.
Mortgage applications to buy a home are down 2% from the previous week and 42% lower than the same week in 2021. Year-on-year comparisons continue to surge each week as fewer buyers want or can afford to enter this extremely expensive housing market. .
Mortgage refinancing applications fell by just 0.1% over the week, as they were very low to begin with, down 86% from a year ago. Black Knight says he has less than 150,000 eligible borrowers to benefit from refinancing at current interest rates.
A For Sale Real Estate sign in front of a home in Arlington, Virginia, November 19, 2020.
Saul Loeb | AFP | Getty Images
Mortgage rates fell slightly earlier this week, but are still well above 7% after being around 3% at the beginning of the year. Average contractual interest rates for 30-year fixed-rate mortgages rose from 6.94% to 7.16% with matching loan balances ($647,200 or less) and decreased points from 0.95 (including origination fees) to 0.88. payment.
Federal Housing Administration loans rose slightly this week due to lower interest rates and smaller down payment requirements.
Mortgage Bankers Association economist Joel Kang said, “Even though interest rates have risen and overall application activity has declined, FHA interest rates have remained lower than traditional loan rates, leading to fewer applications to purchase FHAs.” increased slightly.
The percentage of homebuyers applying for variable rate mortgages remained high, more than four times higher than earlier this year. ARMs offer lower interest rates but are considered riskier products.
High interest rates are also putting pressure on housing prices. Prices are still higher than they were a year ago, but the benefits are: currently decelerating at a record pace. Homebuyers are also reconsidering their purchases. Parte Group reported a 24% cancellation rate in its latest quarterly earnings call on Tuesday, and said it expects even higher rates in the next quarter.