The pain in the mortgage market is only getting worse due to high interest rates and the hammer price of Americans.
Mortgage applications fell more than 6% last week compared to the previous week, reaching the lowest level since 2000, according to the National Mortgage Data Corporation. Bankers Association.
Applications for a mortgage to buy a home fell 7% for the week and are 19% lower than the same week in 2021. Buyers contended with higher prices in the whole year, but with prices almost doubling in January, they have lost a lot of purchasing power.
Read more real estate information
“Sales decreased for traditional and government loans due to the weakening economy, high inflation and ongoing affordability challenges affecting consumer demand,” said Joel Kan, the economics for MBA.
As consumers are less affected by weekly changes in interest rates, the broader picture of rising prices is already taking a toll. Mortgage rates rose again last week after falling slightly in the previous three weeks.
The average contract interest rate for 30-year fixed-rate mortgages with reasonable credit balances ($647,200 or less) rose to 5.82% from 5.74%, with scores rising to 0.65 from 0.59 (including the initial fee) for loans with 20% down. pay. That rate was 3.11% in the same week last year.
Demand for refinancing, which is a very sensitive rate, fell 4% for the week and was 80% lower than the same week a year. ago. Those applications are also at a 22-year low, but the decline in demand from home buyers led to the refinancing share of mortgage activity rising to 31.4% of total applications from 30.8% last week.
Mortgage rates haven’t moved much this week, but that could change quickly because of the increase bond market volatility. The Federal Reserve is expected to raise rates by another 75 basis points next week, and other central banks are doing the same based on inflation. The base rate is equal to 0.01%.
“This will be true next week as markets buy the Fed’s new announcement on Wednesday, but Thursday’s policy announcement from the European Central Bank could also cause a turmoil affecting US rates,” said Matthew Graham, chief executive officer of Mortgage News. Every day.