Connect with us

Hi, what are you looking for?

Business

Mortgage demand drops to lowest level in a month as interest rates rise

Mortgage rates last week hit their highest level since the end of May, which in turn weighed on mortgage demand.

Total mortgage application volume dropped 4.4% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand is now at its lowest level in a month.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.85% from 6.75%, with points rising to 0.65 from 0.64 (including the origination fee) for loans with a 20% down payment.

While that was the average rate for the week, a separate survey from Mortgage News Daily showed the rate crossed over 7% last Thursday. It has remained above that mark since then, rising to 7.08% on Tuesday of this week.

As a result, mortgage demand to purchase a home, which had been rising for three straight weeks, dropped 5% for the week and was 22% lower than the same week one year ago.

“Rates are still over a percentage point higher than a year ago, and housing affordability is still a challenge in many parts of the country,” wrote Joel Kan, MBA’s deputy chief economist, in a release. “However, the average loan size for a purchase application declined to $423,500 — its lowest level since January 2023.”

The drop in loan size, according to Kan, was likely driven by a decline in homebuying in some high-price markets and more activity in some of the lower price tiers.

More from CNBC

Fed sees more rate hikes ahead, but at a slower pace, meeting minutes show Bill Ackman stuns Wall Street by amplifying RFK Jr.’s vaccine skepticism Amazon sellers say they were kicked off site after unknowingly hawking stolen goods

Applications to refinance a home loan fell 4% for the week and were 30% lower than the same week one year ago. As the summer progresses, the annual comparison is likely to shrink, as last summer was when mortgage rates shot significantly higher for the first time since before the Covid pandemic, and refinance demand consequently fell off its high cliff.

While the 30-year fixed has remained over 7% for the last week, it could be affected by employment data set to be released Thursday and Friday. That could influence the Federal Reserve’s next moves, which are likely to include further rate hikes.

This post appeared first on NBC NEWS

    You May Also Like

    Sports

    Kyle Larson spent the week watching videos of his 10-win, 2021 championship season, he said, “to remind myself that I used to be good.”...

    Sports

    Jarrett Payton is looking for the heroes who saved his son’s life. The former Miami Hurricanes running back and son of Pro Football Hall of...

    Sports

    The Formula One season kicked off Sunday in Bahrain, and it was smooth sailing for Red Bull Racing and Max Verstappen. The 25-year-old Dutch star...

    Politics

    The three announced Republican 2024 presidential candidates weighed in over the weekend on the shocking collapse of Silicon Valley Bank (SVB). Former President Donald...

    Disclaimer: americanbrokersalliance.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2023 americanbrokersalliance.com | All Rights Reserved