Weekly mortgage demand from homebuyers down 12%

Mortgage rates actually fell slightly last week, but the damage has already been done to housing affordability. Demand for refinancing and purchase loans has declined, bringing the total volume of mortgage applications down 11% during the week, according to the Mortgage Bankers Association’s seasonally adjusted index.

Mortgage applications to buy a home are down 12% from week to week and down 15% compared to the same week a year ago. This was the first weekly drop in demand for home buyers since the third week in April. Mortgage rates are up more than two full percentage points since the start of the year, and home prices are up more than 20% from a year ago.

The average contract interest rate for 30-year fixed-rate mortgages with matching loan balances ($647,200 or less) decreased to 5.49% from 5.53%, with points increased to 0.74 from 0.73 (including origination fees) for loans of 20%. low premium.

Inflation doesn’t help consumers feel the flow either.

“General uncertainty about the near-term economic outlook, as well as recent volatility in the stock market, may cause some families to delay their home search,” said Joel Kahn, MBA economist.

Home loan refinancing applications continued their landslide, dropping another 10% from week to week. Refinancing demand was 76% lower than the same week a year ago. Two years of record low interest rates in covid pandemic He instigated a refinancing boom that has now collapsed. There is simply a very small group of borrowers who can now benefit from refinancing.

While declining very slightly from the previous week, the share of adjustable rate mortgages in total applications remained high at 10.5%. It was about 3% at the beginning of this year. ARM offers low interest rates and can be at a fixed rate for up to 10 years.

Mortgage rates rose again on Tuesday, after strong retail sales data and comments from Federal Reserve Chair Jerome Powell, who said the Fed would not hesitate to continue raising interest rates until inflation eases.

The weekly drop in mortgage demand for homebuyers aligns with another report released Tuesday by the country’s homebuilders. they reported A significant decrease in buyer traffic and current sales conditions, according to the National Association of Home Builders. Building sentiment fell to its lowest level in nearly two years.