A “For Sale” sign outside a home in Albany, Calif., on Tuesday, May 31, 2022.
David Paul Morris | bloomberg | Getty Images
Mortgage rates last week hit their highest level since the end of May, which in turn affected mortgage demand.
Total mortgage application volume last week decreased 4.4% from 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 matching loan balances ($726,200 or less) rose to 6.85% from 6.75%, with the score increasing to 0.65 from 0.64 (including origination fees) for loans of 20%. low premium.
While that was the average rate for the week, a separate survey from Mortgage News Daily showed that the rate was over 7% last Thursday. It has remained above that level since then, rising to 7.08% on Tuesday of this week.
As a result, mortgage demand to buy a home, which has been rising for three consecutive weeks, fell 5% during the week and was 22% lower than the same week a year ago.
“Rates are still more than a percentage point higher than they were a year ago, and housing affordability remains a challenge in many parts of the country,” Joel Kahn, MBA’s deputy chief economist, wrote in a statement. However, the average loan-to-request size fell to $423,500 – its lowest level since January 2023.
The decline in loan size, according to Kan, is likely driven by lower home purchases in some of the higher-priced markets and increased activity at some of the lower-priced levels.
Home loan refinance applications were down 4% for the week and were 30% lower than the same week a year ago. As the summer progresses, the year-over-year comparison is likely to shrink, as it did last summer when mortgage rates rose dramatically for the first time since before the pandemic, and thus refinancing demand fell off the high slope.
While the 30-year flat rate remained above 7% for the past week, it may be affected by employment data scheduled for release on Thursday and Friday. This could affect the Fed’s next moves, which are likely to include further rate hikes.