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Mortgage demand falls further as interest rates climb back to June high

GP: Homes for sale

Brittany Murray Via Getty Images | Medianews Group | Getty Images

In June, the average 30-year fixed rate briefly rose above 6%, which was enough to turn the once boiling housing market upside down. Rates fell in July and August, but the damage was already done. Today, rates are again above 6%, leading to an even greater drop in already beleaguered mortgage demand.

The average contractual interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) rose to 5.94% last week from 5.80% the previous week, for loans with a 20% down payment, according to the Mortgage Bankers Association. . That was the weekly average, but there were a few days when the rate topped 6% in another Mortgage News Daily survey.

“Mortgage rates have risen over the past week as markets continued to reassess the outlook for the economy and the trajectory of monetary policy, with expectations that short-term rates will move and stay higher for longer. “said Mike Fratantoni, MBA Senior Vice President and Chief Economist.

As a result, mortgage applications to refinance a home loan fell another 1% for the week and were 83% lower than in the same week a year ago. Mortgage rates were just below 3% a year ago and were at record lows for most of 2021, so there are very few people now who haven’t already refinanced at a much lower rate. than that available today.

Mortgage applications for buying a home fell 1% for the week and were 23% lower than in the same week a year ago. At today’s higher rates, someone buying a $400,000 home would be paying almost $700 more per month than a year ago.

“Recent economic data will likely prevent any significant decline in short-term mortgage rates, but the strong labor market depicted in the August data should support housing demand,” Fratantoni said, adding, “There is no no signs of a rebound in buy orders. again, but the robust labor market and an increase in housing inventory should lead to an eventual increase in buying activity.”

Mortgage rates rose further at the start of this week as investors await a series of speeches from members of the Federal Reserve that could give more insight into the scale of the next rate hike. Rising mortgage rates are already cooling home prices, but given how far they have risen in recent years, it will likely take a lot more cooling before affordability fully recovers.


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