Weekly mortgage demand shrinks, interest rates rise even more

A man enters a Bank of America branch in New York.

Scott Millian | CNBC

Mortgage rates rose again last week, which led to more cold water on demand from both existing homeowners and potential homebuyers. Weekly application volume was down 0.1% 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 matching loan balances ($647,200 or less) increased to 7.14% from 7.06%, with points increasing to 0.77 from 0.73 (including origination fees) for loans of 20%. Pay.

“Mortgage rates rose last week after news that the Federal Reserve would continue to raise short-term interest rates to combat high inflation. The 30-year fixed rate remained above 7 percent for the third week in a row, with increases for most types of loans,” he said. Joel Kahn, Deputy Chief Economist at the MBA.

Demand for refinancing, crushed by a sharp rise in interest rates, fell another 4% during the week, down 87% from the same week a year ago. Mortgage rates this year started around 3%, so there are very few borrowers left who can take advantage of refinancing at the higher rates today. Demand for refinancing is now at its lowest level in 22 years.

Mortgage applications to buy a home increased 1% during the week. While this wasn’t a huge step, it was the first increase in six weeks. However, buying demand is still down 41% from a year ago and near a seven-year low.

The share of adjustable mortgage (ARM) activity increased to 12% of all applications. ARM offers low interest rates, and while they are riskier loans, their rates can be fixed for up to 10 years.

Mortgage rates were moving sideways to start this week, but that could change on Thursday, as investors await the October reading of the government’s CPI.

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