The real estate for sale sign of a house is seen in front of a house in Arlington, Virginia on November 19, 2020.
Saul Loeb | AFP | Getty Images
Demand for mortgages fell last week to nearly half of what it was a year ago, according to the Mortgage Bankers Association, as rates hit their highest level in 21 years.
Overall, mortgage demand is at its lowest level since 1997.
Mortgage applications for buying a home fell 2% from the previous week and were 42% lower than the same week in 2021. The annual comparison continues to jump each week, as new Fewer and fewer buyers want or can afford to enter this very expensive real estate market. .
Home loan refinance applications were down just 0.1% for the week, but only because they were so low to begin with – down 86% from a year ago. There are currently fewer than 150,000 qualified borrowers who could qualify for refinancing at today’s rates, according to Black Knight.
Mortgage rates have fallen slightly to start this week, but are still well above 7% after starting the year at around 3%. The average contractual interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) fell from 6.94% to 7.16%, with points rising from 0.95 at 0.88 (including origination fees) for loans with a 20% decline. Payment.
Federal Housing Administration loans, which come with lower rates and lower down payment requirements, saw an uptick during the week.
“Despite higher rates and lower overall demand activity, there was an uptick in FHA purchase inquiries as FHA rates remained lower than conventional lending rates,” said Joel Kan, economist at the Mortgage Bankers Association.
The share of homebuyers applying for adjustable rate mortgages remained high at more than four times what it was at the start of this year. ARMs offer lower rates but are considered a riskier product.
High interest rates are also weighing on house prices. Although prices are still higher than a year ago, gains are slow down now at a record pace. Home buyers are also reconsidering their purchases. Pulte Group reported a 24% cancellation rate in its latest quarterly earnings report on Tuesday and said it expected an even higher rate for the next quarter.
