Mortgage demand drops as interest rates soar over 7%

Mortgage
rates
rose
for
the
third
straight
week
last
week,
hitting
the
highest
level
since
November.
As
a
result,
mortgage
application
demand
dropped
2.7%
compared
with
the
previous
week,
according
to
the
Mortgage
Bankers
Association’s
seasonally
adjusted
index.

The
average
contract
interest
rate
for
30-year
fixed-rate
mortgages
with
conforming
loan
balances
($766,550
or
less)
increased
to
7.24%
from
7.13%,
with
points
increasing
to
0.66
from
0.65
(including
the
origination
fee)
for
loans
with
a
20%
down
payment.

Applications
to
refinance
a
home
loan,
which
are
most
sensitive
to
weekly
moves
in
interest
rates,
fell
6%
for
the
week
and
were
3%
higher
than
the
same
week
one
year
ago.

Applications
for
a
mortgage
to
purchase
a
home
fell
1%
for
the
week
and
were
15%
lower
than
the
same
week
one
year
ago.
As
home
prices
rise
along
with
interest
rates,
potential
buyers’
purchasing
power
are
suffering
a
double
whammy.

“Purchase
applications
declined,
as
home
buyers
delayed
their
purchase
decisions
due
to
strained
affordability
and
low
supply,”
said
Joel
Kan,
MBA’s
deputy
chief
economist.

As
often
happens
when
affordability
takes
a
hit,
the
adjustable-rate
mortgage
share
of
applications
rose
last
week
to
7.6%.
ARMs
offer
lower
rates
and
can
be
fixed
for
up
to
10
years,
although
they
are
considered
riskier.

Mortgage
rates
have
eased
very
slightly
so
far
this
week,
but
there
hasn’t
been
much
economic
data
to
influence
them.
That
will
change
next
week,
when
the
all-important
monthly
employment
report
is
released.