Mortgage rates fall for the first time in two months as mortgage demand continues to soften

  • Mortgage rates fell for the first time in two months last week, but remain at a 20-year high, according to the Mortgage Bankers Association.
  • Average contract interest rates for 30-year fixed mortgages fell to 7.06% in the week ending 28 October.
  • Monthly payments on new loans have increased by more than 55% this year, according to Breen Capital analysts.

The Mortgage Bankers Association reported Wednesday that key mortgage rates fell for the first time in two months, but interest rates are still at a 20-year high, with weekly applications for home loans increasing. continued to decline.

Average contract interest rates for 30-year fixed mortgages with loan balances under $647,200 fell to 7.06% in the week ending 28 October, from 7.16% the week before.

Mortgage rates this year topped 7% for the first time since 2002. That’s because Treasury bond yields surged as the Federal Reserve raised borrowing rates to keep inflation in check. The Federal Reserve on Wednesday was widely expected to raise the Fed Fund rate for his fifth round in 2022 by another 75 basis points.

“The biggest impact of a primary rate above 7.00% is monthly affordability. [principal and interest] New loan payments have increased by more than 55% year-to-date, resulting in marginal borrowers buying 35% fewer homes,” Scott Buchta, head of fixed income at Breen Capital, wrote in a note. .

Mortgage applications fell 0.5% on a seasonally adjusted basis, according to MBA. This was the sixth straight week of decline. He fell 1% on an unadjusted basis.

However, there was a move among homeowners to refinance, with applications up 0.2%.

However, the group’s refinancing index was 85% lower than the same period last year.

The MBA’s deputy chief economist, Joel Kang, said in the industry group’s latest research report that most homeowners are already “fixed to significantly lower interest rates.”

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