Mortgage Rates Rise, Refinancing Slows Down
Mortgage rates have increased for the fourth time in five weeks, causing a decline in refinancing activity. According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume remained relatively flat, decreasing by 0.1% compared to the previous week.
Interest Rates Reach New Heights
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) rose to 6.73% from 6.52%. This marks the highest level since July of this year. Points also increased to 0.69 from 0.64 (including the origination fee) for loans with a 20% down payment.
Refinancing Activity Drops
Applications to refinance a home loan decreased by 6% for the week, despite being 84% higher than the same week last year when the 30-year fixed rate was 113 basis points higher. Government refinances accounted for a significant portion of the decline, dropping 12% over the previous week.
Home Purchase Applications Increase
In contrast, applications for a mortgage to purchase a home rose by 5% for the week and were 10% higher than the same week last year. Real estate brokerages have reported an surge in interest from homebuyers, possibly due to the increased supply of homes for sale and the desire to lock in rates before potential market volatility around Election Day.
Market Volatility Expected to Continue
Mortgage rates have continued to rise, with the average rate on the 30-year fixed exceeding 7% on Tuesday, according to Mortgage News Daily. Experts predict that market volatility will remain elevated through the second half of next week, with significant movement possible each day.
Key Dates to Watch
The jobs report, election, and Fed announcement are expected to be major drivers of market volatility in the coming days. Friday, next Wednesday, and next Thursday are considered the riskiest days for substantial movement.
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