Mortgage demand is now less than half of what it was a year ago, as interest rates move even higher
Mortgage demand is now less than half of what it was a year ago, as interest rates move even higher
Abstract
Total mortgage application volume was 52.7% lower last week than the same week one year ago, according to the Mortgage Bankers Association's seasonally adjusted index. Sharply rising interest rates are decimating refinance volume, and those rates, along with sky-high home prices and a shortage of houses for sale, are hitting demand from potential buyers. Last week, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 5.65% from 5.40%, with points rising to 0.71 from 0.60 for loans with a 20% down payment. "Mortgage rates followed Treasury yields up in response to higher-than-expected inflation and anticipation that the Federal Reserve will need to raise rates at a faster pace," said Joel Kan, an MBA economist. Refinance demand rose 4% for the week but was 76% lower than the same week one year ago. "Despite the increase in rates, application activity rebounded following the Memorial Day holiday week but remained 0.29 percent below pre-holiday levels," added Kan. "Mortgage rates increased faster than at any point in history. We could be facing years, not months, of fewer home sales, and Redfin still plans to thrive. If falling from $97 per share to $8 doesn't put a company through heck, I don't know what does," wrote Redfin CEO Glenn Kelman on the company's website.
