Ryan Ratliff (left), real estate sales associate at Re/Max Advance Realty, shows Ryan Paredes (right) and Ariadna Paredes a home for sale on April 20, 2023 in Cutler Bay, Florida.
Joe Raedle | Getty Images News | Getty Images
Mortgage interest rates have just reached a level not seen since 2000. As a result, demand for mortgages is now near a 27-year low.
Total mortgage application volume fell 1.3% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was 25.5% lower than the same week a year ago.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 7.41%, from 7.31%, with points decreasing to 0 .71 versus .72 (including origination fees) for loans with an interest rate of 20%. deposit. The rate was 6.52% a year ago.
The 30-year jumbo fixed mortgage rate increased to 7.34%, the highest rate in the history of the MBA jumbo rate series dating back to 2011.
“Based on the FOMC’s most recent projections, rates are expected to remain higher for longer, which has driven Treasury yields higher,” said MBA economist Joel Kan, referring to the Federal Treasury Committee. Open Market. “Overall, inquiries have declined as potential buyers and homeowners continue to feel the impact of these high rates.”
Requests to refinance a home loan fell 1% over the week and were 21% lower than a year ago. After historically low interest rates throughout the early years of the pandemic and a refinancing boom, few borrowers now have mortgage rates high enough to qualify for refinancing.
Mortgage applications to purchase a home fell 2% for the week and were 27% lower than the same week year-over-year.
Today’s prospective buyers face unprecedented dynamics characterized by a historically low supply of homes for sale, coupled with both rising interest rates and rising prices. Higher interest rates have always cooled house prices, but the imbalance between supply and demand is so severe that it is driving up prices, even though more and more buyers have cannot afford to buy a house.
Interest rates continued to rise this week, according to a separate investigation by Mortgage News Daily. Even sales of newly constructed homes, which had increased due to shortages in the resale market, were hit in August, according to another report released this week. Sales fell nearly 9% in August compared to July, reaching their lowest level since March.