Housing applications stall as buyers hit the brakes
Mortgage rates took a step closer to 7% this week, according to the latest Primary Mortgage Market Survey (PMMS) released by Freddie Mac.
The 30-year fixed-rate mortgage (FRM) averaged 6.95% as of July 3, up from 6.86% last week and 6.81% a year ago. The 15-year FRM also saw an increase, averaging 6.25%, up from 6.16% last week. This rate is slightly higher than the 6.24% recorded a year ago.
“Mortgage rates increased this week, coming in just under 7%,” Freddie Mac chief economist Sam Khater said in the PMMS report. “Both new home and pending home sales are down, causing active listings to rise.”
Active listings have increased by 0.3% from March and 7.5% from a year earlier on a seasonally adjusted basis, according to a recent Redfin report.
The rise in mortgage rates has led to a decrease in mortgage applications. The Mortgage Bankers Association reported a 2.6% decrease in applications from the previous week.
“Purchase applications decreased the final full week of June, even as both new and existing inventories have increased over the past few months,” said Mike Fratantoni, senior vice president and chief economist at MBA. “Refinance activity also remains subdued – although there was a slight increase in applications for conventional refinance loans.”
Holden Lewis, home expert at NerdWallet, noted the unusual nature of this rate increase: “Mortgage rates went up this week to their highest levels since early June, and there’s no obvious explanation for the reason. When rates rise inexplicably, it’s especially important to shop multiple lenders to compare rates and fees, because inevitably one lender will offer a better deal than the others.”
Despite the current upward trend, Khater remains optimistic about the future.
“We are still expecting rates to moderately decrease in the second half of the year and given additional inventory, price growth should temper, boding well for interested homebuyers,” Khater said.
This week’s survey results include an adjustment for the observance of Independence Day.
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