A sign is posted in front of a For Sale home in San Rafael, California on August 7, 2024.
Justin Sullivan | getty images
Last week, mortgage loan interest rates rose for three weeks in a row and reached the highest level since August. This has significantly reduced demand from both current homeowners and potential homebuyers. Total mortgage applications fell 17% last week compared to the week before, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for a 30-year fixed-rate mortgage with a qualifying loan balance ($766,550 or less) increased from 6.36% to 6.52%, and the points increased from 0.62 (including the origination fee) to 0.65 for loans with a 20% reduction. pay.
Refinancing demand, which is most sensitive to weekly interest rate changes, saw the biggest decline, down 26% on a weekly basis. But it was still 111% higher than the same week a year ago. This time a year ago, interest rates were 118 basis points higher, so anyone who bought a home last year will be able to benefit from refinancing now. The proportion of refinance applications fell below 50% for the first time in a month.
Mortgage applications to buy a home fell 7% for the week but was 7% higher than the same week a year ago. Now, with more supply on the market, opportunities are opening up for some buyers.
“Demand for prospective first-time buyers remains modest. There has been little change in FHA purchase applications despite rate increases, as improving housing inventory conditions have kept some first-time homebuyers in the market,” said Joel Kan. said. MBA Economist, presenting.
Rates haven’t gone up much this week, especially given Monday’s federal holiday. The recent rise in mortgage rates may have slowed refinancing, but homebuyers may also be less concerned about current interest rates and more concerned about economic conditions in the coming months. Some say they are holding off on making big purchases until after the November election.
