Mortgage rates at their 20-year high leaving home buyers reluctant
The Market Composite Index, a measure of mortgage loan application volume, plunged by 6% on a seasonally adjusted basis, according to new data from the Mortgage Bankers Association.
The Refinance Index also decreased by 7% from the previous week’s data on a seasonally adjusted basis, and the Index was lower by 11% year over year. The Purchase Index also fell by 6% from a week earlier on a seasonally adjusted basis, while on an unadjusted basis, the Index also decreased by 6% from the previous week’s and was 22% lower compared to the same week a year ago.
Applications down with mortgage rates remaining elevated
Joel Kan, vice president and deputy chief economist at MBA, said the data is the result of high mortgage rates, which have been described as being at a 20-year high.
“Mortgage rates continued to move higher last week as markets digested the recent upswing in Treasury yields. Rates for all mortgage products increased, with the 30-year fixed mortgage rate increasing for the fourth consecutive week to 7.53% – the highest rate since 2000,” said Kan.
“As a result, mortgage applications ground to a halt, dropping to the lowest level since 1996. The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market. ARM loan applications picked up over the week and the ARM share increased to 8% as some borrowers searched for ways to lower their payments.”
The adjustable-rate mortgage (ARM) share of activity increased to 8% of total applications. The USDA share of total applications remained at 0.5% compared to the week prior.
The average contract interest rate for 30-year fixed rate mortgages with conforming loan balances ($726,200 or less) increased to 7.53%, with points increasing to 0.8 for 80% loan-to-value ratio (LTV) loans. Meanwhile, the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) increased to 7.51%, with points decreasing to 0.74 for 80% LTV loans.
The average contract interest rate for 30-year fixed rate mortgages backed by the FHA increased to 7.29%, with points increasing to 1.01 for 80% LTV loans. The average contract interest rate for 15-year fixed-rate mortgages increased to 6.86%, with points decreasing to 1.14 for 80% LTV loans. The average contract interest rate for 5/1 ARMs increased to 6.49%, with points decreasing to 1.21 for 80% LTV loans.
Any thoughts about the latest report? Leave your comments below.
