A sign in front of a house for sale on July 14, 2022 in San Francisco, California. The number of homes for sale in the US rose 2% in June for the first time since 2019.
Justin Sullivan | Getty Images
Mortgage demand, which has suffered four straight months of decline, fell last week to its lowest level since 1997, as interest rates continued to rise.
Homebuyers’ demand for mortgages fell 4% on the week and was 38% less than in the same week a year ago, according to the Mortgage Bankers Association. Home loan refinancing applications were down 7% from the previous week, on seasonally adjusted terms. Demand was 86% lower than the same week a year ago.
The number of borrowers who can benefit from refinancing has fallen to a record low. Interest rates were very low during the first two years of covid pandemic The vast majority of borrowers with higher rates are already refinancing.
The average contract interest rate for 30-year fixed-rate mortgages with matching loan balances ($647,200 or less) increased to 6.94% from 6.81%, with points dropping to 0.95 from 0.97 (including origination fees) for loans of 20%. low paying. This is the highest rate since 2002 in the MBA Index.
“The speed and level to which interest rates have risen this year has significantly reduced refinancing activity and exacerbated the current affordability challenges in the buying market,” said Joel Kahn, MBA economist, in a statement released Wednesday. “Residential housing activity ranging from new home starts to home sales has been on downtrends concurrent with price increases.”
As potential homebuyers struggle to buy a home, due to rising interest rates and continuing home prices, more are now turning to adjustable rate loans, which offer lower interest rates. ARM’s share rose last week to 12.8% of all applications, the highest since March 2008.
Mortgage rates have moved higher even this week, with another reading from Mortgage News Daily setting the 30-year at 7.15% on Tuesday.
Higher rates caused lower buyer demand housing construction feelings to fall again in the National Association of Home Builders Index. Building sentiment, now in the negative range, is half what it was just six months ago.
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