Mortgage Rates Continue to Rise, Demand Plummets
The mortgage market is experiencing a significant downturn, with rates increasing for the fourth consecutive week. As a result, mortgage application volume has dropped 3.7% compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
Rates Reach 6.99% for 30-Year Fixed-Rate Mortgages
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) has risen to 6.99%, up from 6.97% the previous week. While points decreased to 0.68 from 0.72, including the origination fee, for loans with a 20% down payment, the overall trend is clear: rates are on the rise.
Refinancing Applications See Slight Uptick, But Still Lag Behind
Applications to refinance a home loan increased 2% from the previous week, but remain 6% lower than the same week one year ago. This modest gain is largely due to the extremely low volume of refinances currently. Rates are now 18 basis points higher than they were one year ago, making refinancing a less attractive option for many homeowners.
Purchase Applications Plummet 7%
Applications for a mortgage to purchase a home fell 7% for the week, and were 15% lower than the same week one year ago. Despite an increase in available homes for sale, higher rates and prices are deterring potential buyers. “Purchase applications declined for both conventional and government loans and dropped to the slowest weekly pace since February 2024,” noted Joel Kan, vice president and deputy chief economist at the MBA.
Economic Data Drives Rate Increases
Mortgage rates have moved higher to start the week, with the 30-year fixed average reaching 7.14% on Tuesday, according to Mortgage News Daily. The driving force behind this increase is economic data, including the ISM Services’ inflation component and higher job openings. As more economic data is released, including the Federal Reserve minutes and the monthly employment report, rates may continue to rise or potentially change direction.
What’s Next for Mortgage Rates?
The coming days will be crucial in determining the trajectory of mortgage rates. Will economic data continue to drive rates upward, or will the trend reverse? One thing is certain: the mortgage market is in a state of flux, and borrowers must be prepared to adapt to changing conditions.
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