Mortgage rates hit 20-year highs – what to expect in the coming months

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Mortgage rates hit their highest point since 2001 within the Federal Reserve. Several months move to higher interest rates, Heightened uncertainty in the US housing market It is already in decline.

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Mortgage Bankers Association’s Latest Weekly Mortgage Application Survey Shows Average Contract Rate for 30-Year Fixed-Rate Mortgages with Matching Loan Balances ($647,200 or Less) Rising to 7.14% in the Week Ending Nov. 4, 2022 Did. That was up from 7.06% the week before and the highest rate in more than 20 years, according to Bloomberg.

The Market Composite Index, which measures mortgage loan application volumes, fell 0.1% from a week ago on a seasonally adjusted basis. On an unadjusted basis, the index was down 2%. The overall measure of applications, including refinancing, fell to a 25-year low, and the refi index fell to a 22-year low.

“Mortgage rates rose last week following news that the Federal Reserve will continue to raise short-term rates to combat high inflation,” MBA vice president and deputy chief economist Joel Kang said in a statement. did.

Mortgage rates rose across the board during the latest survey period, including jumbo loan balances, FHA loans, and 15-year fixed-rate mortgages. Given that the Fed appears determined to keep raising rates to keep inflation in check, there is little reason to believe rates will reverse anytime soon.

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The impact on the mortgage market could be substantial, said the founder and CEO of Curtis Wood. beea mobile mortgage app built on AI and blockchain.

“In many ways, this is a tougher market for lenders than 2008, and interest rates are going to get worse before they get better, as rates have an easier path to 8% than 6%,” said GOBankingRates. said in an email to. “As we’ve already seen with industry consolidations, closures, bankruptcies and divestments this year, many small and midsize lenders just can’t make it.”

He added that higher interest rates would mean “increasing headwinds for the mortgage market.” These headwinds affect not only mortgage originations, but also margins, creditworthiness and affordability for buyers.

“As interest rates rise, we expect fixed-rate originations to decline and variable-rate mortgages to gain momentum as a last resort for certain buyers,” Wood said.

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Such developments are likely to occur in a chain reaction Impact on the housing marketalready in choppy water.

According to the Black Knight Home Price Index, median home prices have fallen for the third straight month as of September 2022. Meanwhile, pending home sales fell for the fourth month in a row in September, the National Association of Realtors recently reported.

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