Home News Mortgage demand falls to lowest level since 2018, even as interest rates ease

Mortgage demand falls to lowest level since 2018, even as interest rates ease

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A single-family home is for sale in Encinitas, California.

Mike Break | Reuters

Mortgage demand has fallen to its lowest level since December 2018, even after a slight drop in interest rates last week.

According to the Seasonally Adjusted Index of the Mortgage Banking Association, mortgage applications to buy homes have fallen by 1% compared to last week. Volume was 14% less than in the same week a year ago.

Despite a slight decline, mortgage rates are significantly higher than they were earlier this year.

This is because the average contract interest rate for 30-year fixed rate mortgages ($ 647,200 or less) with a matching loan balance has dropped from 5.46% to 5.33%, and the point for a 20% loan is 0.60 (including origination fees). Because it dropped to 0.51. down payment.

“Mortgage rates have fallen for the fourth time in five weeks, as slowing economic growth and recent stock market sellouts have lowered Treasury yields,” said Joel Kang, an MBA economist. ..

Rising interest rates and soaring home prices are having a major impact on affordability. Prices continue to rise Because there are still Low supply It’s on the market, but different demographics of buyers are looking at different pictures.

“Demand is high at the top of the market, and supply and affordability challenges are not as harmful to these borrowers as first-time buyers,” Suga said.

The average contract interest rate for 30-year fixed rate mortgages with jumbo loan balances ($ 647,200 and above) has dropped from 5.02% to 4.93%. Jumbo loans are held primarily in the portfolio of investors and banks, rather than being sold to Fannie Mae or Freddie Mac. Lenders consider them low risk given the high quality of credit of the borrowers they generally go to.

Mortgage refinancing applications are more susceptible to interest rate fluctuations than purchase applications, down 5% in a week and 75% down from the same week a year ago. Even if interest rates have fallen below highs in the past few weeks, refinancing demand has not returned because so many borrowers had already gone through the process when interest rates were at record lows last year.

Mortgage rates have begun to rise this week due to global market volatility, according to a Mortgage News Daily article.

“High inflation in Europe and the easing of Covid-related blockades in China have both hit bonds,” wrote Matthew Graham, COO of Mortgage News Daily.

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