Mortgage Demand Plummets as Interest Rates Surge
A sudden spike in mortgage interest rates has led to a significant decline in mortgage applications from both potential homebuyers and current homeowners. According to the latest data from the Mortgage Bankers Association, total mortgage application volume dropped by 5.1% compared to the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 6.36%, up from 6.14% the previous week. This marks the highest rate since August, with points rising to 0.62 from 0.61, including the origination fee, for loans with a 20% down payment.
The surge in mortgage rates is attributed to stronger economic data, including the September jobs report. As a result, refinancing applications fell by 9% for the week, although they remain 159% higher than the same period last year. Meanwhile, applications for mortgage purchases remained flat, dropping by a mere 0.1% from the previous week.
Despite being lower than last year, mortgage rates are still a significant hurdle for potential homebuyers, especially when combined with higher home prices and limited inventory on the more affordable end of the market. According to a separate survey from Mortgage News Daily, mortgage rates continued to rise on Monday, with the average 30-year fixed-rate mortgage now standing at 6.62%.
Experts predict that rates will continue to fluctuate until new data emerges to put downward pressure on them. As the mortgage market navigates this uncertainty, homebuyers and homeowners alike will be closely watching interest rates to determine their next move.
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