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The pain in the mortgage market is only getting worse as rising interest rates and inflation hit American consumers.
Mortgage demand has fallen by more than 6% compared to last week, reaching its lowest level since 2000, according to the Mortgage Banking Association’s seasonally adjusted index.
Mortgage applications to buy a home were down 7% that week, down 19% from the same week in 2021. Lost considerable purchasing power.
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MBA economist Joel Kang said, “Buying with both traditional and government loans as weakening economic outlook, high inflation and sustainable affordability challenges are impacting buyers’ demand. Activity has declined. “
Buyers are less affected by weekly interest rate fluctuations, but the big picture of rising interest rates has already been hit hard. Mortgage rates have risen again last week after falling slightly in the last three weeks.
The average contract interest rate for 30-year fixed rate mortgages ($ 647,200 or less) with a matching loan balance has risen from 5.74% to 5.82%, and the point for loans that have fallen 20% is from 0.59 (including origination fees) to 0.65. Has risen to. payment. That rate was 3.11% in the same week a year ago.
Demand for refinancing, which is highly sensitive to interest rates, fell 4% that week, down 80% from the same week last year. These applications are also at their lowest levels in 22 years, but due to lower demand from homebuyers, the refinancing share of mortgage activity has increased from 30.8% last week to 31.4% of all applications.
Mortgage rates haven’t fluctuated very much this week, but risings could quickly fluctuate. Bond market volatility.. The Federal Reserve is expected to raise another 75 basis points next week, and other central banks are taking similar measures against inflation. The basis point is 0.01%.
“This is especially true as the market digests the latest Fed policy announcement next Wednesday, but Thursday’s policy announcement from the European Central Bank is also in the United States,” said Matthew Graham, chief executive officer of mortgage news. It can cause enough turmoil to affect the Fed’s interest rates. ” every day.