A detached house for sale in Encinitas, California.
Mike Blake | Reuters
Mortgage demand fell to its lowest level since December 2018, even after rates fell slightly last week.
Mortgage applications to buy a home fell 1% last week compared to the previous week, according to the seasonally adjusted Mortgage Bankers Association index. The volume was 14% lower than the same week a year ago.
Despite a slight decline, mortgage rates are significantly higher than at the beginning of the year.
This is because the average contract interest rate for 30-year fixed-rate mortgages with compliant loan balances ($ 647,200 or less) decreased to 5.33% from 5.46% and the points went go down to 0.51 from 0.60 (including the origination fee) for loans with a 20% deposit.
“Mortgage rates fell for the fourth time in five weeks as concerns about weaker economic growth and the recent liquidation of the stock market pushed Treasury yields down,” said Joel Kan, an MBA economist.
Rising interest rates and strong gains in house prices are severely affecting affordability. Prices continue to rise because there is still little supply on the market, but different levels of buyers are seeing different images.
“Demand is high at the top end of the market, and supply and affordability challenges are not as detrimental to these borrowers as they are to first-time buyers,” Kan said.
The average contractual interest rate on 30-year fixed-rate mortgages with jumbo loan balances (above $ 647,200) decreased from 5.02% to 4.93%. Jumbo loans are mainly held in investor and bank portfolios, rather than sold to Fannie Mae or Freddie Mac. Lenders see them as less risky given the higher credit quality of the borrower they generally turn to.
Home loan refinancing applications, which are more sensitive to interest rate changes than purchase applications, fell 5% during the week and were 75% lower in the same week of One year ago. Although rates have dropped from their highs in recent weeks, demand for refinancing has not returned because many borrowers have already gone through the process when rates were at historic lows last year.
Mortgage rates began to rise this week, according to a Mortgage News Daily reading, due to the volatility of global markets.
“High inflation in Europe and easing of Covid-1-related blockages in China affected bonds,” wrote Matthew Graham, COO of Mortgage News Daily.