Potential home buyers come to a home for sale in Dunlap, Illinois with Realtor.
Daniel Acker | Bloomberg | Getty Images
High interest rates have taken some of the wind out of the mortgage market recently.
According to the Mortgage Bankers Association’s seasonal consolidated index, after a gain in the previous week, the total amount of mortgage applications fell 1.1% last week compared to the previous week.
The average contract interest rate for 30-year fixed rate mortgages with a loan balance up to $ 548,250 increased from 3.03% to 3.10%. Points with origin fee for loans with 20% down payment have been increased from 0.34 to 0.34.
“Rising optimism about the strength of the economy since last week’s FOMC meeting has boosted Treasury yields. In response, mortgage rates have risen on all types of loans, with the benchmark 30-year fixed rate reaching its highest level since early July 2021,” said Joel Kahn President.
Applying for a home loan refinancing, which is highly sensitive to weekly rate movements, has declined by 1% compared to the previous week and was largely flat from a year ago. Interest rate hikes occurred over the weekend and continue this week, suggesting that the negative impact of renewable demand will be more severe in next week’s report.
Mortgage applications for buying a home fell 1% last week and were down 12% from a year ago. The weakness of purchase demand is less about rising interest rates, which are still historically low, and more about sky-high home prices.
According to the latest S&P CoreLogic Case-Schiller Home Price Index, prices rose 19.7% nationally in July, up 18.7% year-on-year in June. This is another record increase.
“Home prices continue to rise more than 19 percent annually in July, with applications for large loans exceeding low-balance outs. The average size of purchase applications has reached $ 410,000, the highest level since May 2021,” Kahn said.
The price increase is expected to start a little cold soon, as sales have fallen and more supplies are coming into the market. Higher mortgage rates will also take some fuel from rising prices, as potential buyers will face higher monthly payments.