Tuesday, December 6, 2022, at home in Rocklin, California.
David Paul Morris | David Paul Morris Bloomberg | Getty Images
On April 1, the average interest rate on the popular 30-year fixed mortgage topped 7%, according to the data. Daily Mortgage News, and it keeps going. The ratio is currently about 7.5%, the highest level since mid-November last year.
Last October, interest rates reached their highest levels in decades, causing home sales to stall. Builders are offering customers bargains and trying to outdo existing home sellers.
Interest rates then dropped to around 6% in mid-January and continued into February, leading to a surge in home sales. But then they started to rise again.
Chief Economist Danielle Hale said: “By mid-February, a pickup in inflation reset expectations and put mortgage rates back on an upward trend, and the latest data from Fed Chairman Powell and comments only highlight inflation concerns: “Sales data in the coming months will likely reflect the impact of currently higher mortgage rates. “
However, despite higher interest rates, mortgage applications to purchase a home increased 5% last week from the previous week, according to the Mortgage Bankers Association. seasonally adjusted index. Although interest rates are currently 70 basis points higher than a year ago, demand is still 10% lower than the same week a year ago.
“Despite higher interest rates, the increase in application activity may be because some borrowers decided to take action as interest rates continue to rise,” said MBA chief economist Joel Kan.
However, this may be short-lived as affordability weakens further. Although there is more supply on the market now than a year ago, it is still at historically very low levels. This has resulted in homes being moved at an accelerated pace as competition increases. Anyone waiting for interest rates to drop significantly is probably in for a while.
“Recent economic data shows that the economy and job market remain strong, which will likely keep mortgage rates higher in the near future,” said MBA President and CEO Bob Broeksmit.
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