A real estate agent comes out of a house for sale in Lancaster, Ohio.
Ty Wright | Bloomberg | Getty Images
Another week of rising rates prompted homeowners and buyers to withdraw from the mortgage market and the trend is not expected to occur any time soon.
The total volume of mortgage applications fell 5.1% last week from the previous week, according to the seasonally adjusted Mortgage Bankers Association index.
The average contract interest rate for 30-year fixed-rate mortgages with compliant loan balances ($ 548,250 or less) rose to 2.98% from 2.96% of loans with an income of 20 %. This rate was 79 basis points higher than a year ago.
“Expectations of faster economic growth and inflation continue to raise Treasury yields and mortgage rates. Since reaching a low poll in December, the 30-year fixed rate has risen slowly and rose last week at its highest level since November 2020, ”he said. Joel Kan, associate vice president of economic and industrial forecasting for the MBA. The association began its weekly survey in March 1990.
Applications to refinance a home loan, very sensitive to weekly interest rate fluctuations, fell 5% over the previous week, but were 51% higher than a year ago. This annual comparison, however, was double what it was a few weeks ago, before rates rose. The mortgage refinancing rate decreased to 69.3% of total applications, from 70.2% the previous week.
Mortgage applications to buy a home fell 6% a week and were 15% higher than a year earlier. The volume of purchases falls less due to higher rates and more due to the record low inventory of homes for sale.
Prices are also rising at the fastest pace in more than six years. The average purchase loan size reached another peak survey: $ 412,200, in part due to higher house prices, but also due to a large drop in FHA loan applications. FHA mortgages, which offer a low down payment, are preferred by first-time buyers at the entry-level market. The lack of inventory is also more acute at the bottom.
Mortgage rates continued their rise to begin this week, following the 10-year Treasury yield. On Tuesday, mortgage rates rose at their fastest pace in several months.
“At some point, the market momentum becomes its own justification and snow bonds bond prices are reaching ever-lower levels,” wrote Matthew Graham, chief operating officer of Mortgage News Daily . “When bond prices go down, rates go up.”