Mortgage Refinances Fall Amid Higher Rates!Return to Blog
Mortgage rates took another jump higher last week, taking their toll on current borrowers who might have wanted to refinance. Demand from homebuyers, however, appears to be hanging in for now.
According to the Mortgage Bankers Association’s seasonally adjusted index, the total mortgage application volume decreased 6.8% last week compared with the previous week as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.80% from 4.50%, with points decreasing to 0.56 from 0.59 (including the origination fee) for loans with a 20% down payment.
“Mortgage rates jumped to their highest level in more than three years last week, as investors continue to price in the impact of a more restrictive monetary policy from the Federal Reserve,” said Michael Fratantoni, MBA’s chief economist.
Driving the downturn in overall mortgage demand was a 15% weekly drop in refinance applications. They are now down a whopping 60% from a year ago. The refinance share of mortgage activity decreased to 40.6% of total applications from 44.8% the previous week.
Mortgage applications to purchase a home increased 1% for the week but were 10% lower than the same week one year ago. Homebuyers today continue to face sky-high prices and record low supply in addition to rising mortgage rates. Affordability is weakening dramatically, but some real estate agents say the competition is not letting up. While from buyers’ perspectives at a recent open house held last week, they were steeling themselves for a bidding war, considering the need to have an offer of $40,000 over the asking price.
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