Demand for mortgages fell for the fourth straight month and fell to its lowest level since 1997 last week as interest rates continue to rise.
Homebuyer demand for mortgages fell 4% this week, down 38% from the same week a year ago, according to the Mortgage Bankers Association. Mortgage refinancing applications decreased 7% from the previous week on a seasonally adjusted basis. Demand was 86% lower than the same week a year ago.
The number of borrowers who can benefit from refinancing is at a record low.Interest rates for the first two years were very low covid pandemic It shows that the majority of high-interest borrowers have already refinanced.
A sign in front of a house for sale in San Francisco, California, July 14, 2022. The number of homes for sale in the US increased by 2% in June for the first time since 2019.
Justin Sullivan | Getty Images
Average contractual interest rates for 30-year fixed-rate mortgages were in line with loan balances (under $647,200), rising from 6.81% to 6.94%, and points decreased from 0.97 (including origination fees) to 0.95. did. payment. This is the highest percentage since 2002 in the MBA index.
“The speed and level of interest rate increases this year have significantly reduced refinancing activity and exacerbated existing affordability challenges in the buying market,” MBA economist Joel Kang said in a Wednesday release. Housing activity, from construction starts to home sales, has been trending downward in line with rising interest rates.”
Given higher interest rates and still-high home prices, more and more potential homebuyers are turning to variable rate loans that offer lower interest rates as they struggle to afford a home. ARM’s share rose to 12.8% of all applications last week, its highest share since March 2008.
Mortgage rates rose further this week, with another reading from Mortgage News Daily putting the 30-year peg at 7.15% on Tuesday.
Due to higher interest rates and lower buyer demand Emotions of a home builder The index of the National Association of Home Builders falls again. Builders sentiment is now in the negative range, half what it was just six months ago.