Future homebuyers will arrive with a realtor at a home for sale in Dunlap, Illinois.
Daniel Acker | Bloomberg | Getty Images
The sharp rise in mortgage rates has hit loan demand, especially refinancing. According to the Seasonally Adjusted Index of the Mortgage Bankers Association, total mortgage applications fell 8.1% compared to last week.
The average contract interest rate for 30-year fixed rate mortgages ($ 647,200 or less) with a matching loan balance has risen from 4.27% to 4.50%, and the point of a loan that has fallen 20% is from 0.54 (including origination fees) to 0.59. Has risen to. payment.
“The surge in interest rates comes from the much faster pace of interest rate hikes in the market and the expected decline in MBS purchases from the Federal Reserve Board,” said Mike Fratantoni, chief economist at MBA. “. “The MBA’s new March forecast predicts that mortgage rates will continue to rise until 2022.”
As a result, mortgage refinancing applications, which are highly sensitive to weekly interest rate fluctuations, were down 14% from the previous week and 54% from the same week a year ago. The refinancing share of mortgage activity fell from 48.4% last week to 44.8% of the total application.
Andy Walden, Vice President of Enterprise Research at Black Knight, said: “But now, while overall lending activity is declining, the amount of cash outlock remains stronger than interest rate / term refine against rising interest rates. This is a particularly tappable 10 trillion. Given the dollar record, it will be an important market segment for lenders. Available stocks are further filled by the still-hot housing market. “
Mortgage applications to buy homes that are less susceptible to weekly interest rate fluctuations were down 2% that week, down 12% from the same week a year ago. Economists are beginning to revise their home sales forecasts downwards due to rising interest rates. The housing market is already expensive as supply and demand imbalances put upward pressure on prices. The rate of increase is further weakening affordability.
Demand for FHA and VA loans has declined significantly, although overall purchase subscriptions have declined slightly. These loans are popular with low-income homebuyers.
“First-time homebuyers who rely on these government programs are increasingly challenged by both sharp rises in home prices and rising mortgage rates,” Fratantoni added.