Mortgage rates moved higher again last week, pushing finance-requiring buyers to the sidelines as the spring housing market should be heating up.
Primary residence mortgage applications dropped 6% last week compared with the week prior.
Volume was 44% lower than the same week one year ago, and is now sitting at a 28-YEAR LOW.
This as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.71% from 6.62%, with points rising to 0.77 from 0.75 (including the origination fee) for loans that are secured with a minimum of a 20% down payment.
That is the highest rate since November of last year.
Mortgage rates have moved 50 basis points higher in just the past month.
Last February, rates were in the 4% range.
Data on inflation, employment, and economic activity have signaled that inflation may not be cooling as quickly as anticipated, which continues to put upward pressure on interest rates supported by the Fed.
Applications to refinance a home loan fell 6% for the week and are a whopping 74% lower year over year.
Refinance applications account for less than one third of all applications and remained more than 70% behind last year’s pace.
The majority of homeowners that are already locked into lower rates likely have no plans of letting go of that secured inexpensive financing.
Mortgage rates haven’t done much to start this week, but the trajectory now appears to be higher after a brief respite in January.
Lower rates to start the year caused by a brief surge in home buying, but mortgage demand from homebuyers would seem to indicate a very slow spring buying season is ahead.
While for the cash buyers this may swing the market opportunities in their favor. Less qualified buyers mean lower demand, lower demand means lower prices, lower prices are what cash buyers prefer.
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