GP: House for sale
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In June, the average 30-year fixed-term rate spiked more than 6% shortly, and that was enough to turn the once hot housing market on its heels. Rates rebounded in July and August, but the damage was done. Now, interest rates have again crossed the 6% mark, causing the previously anticipated mortgage demand to fall even further.
The average contract rate for 30-year fixed-rate mortgages with matching loan balances ($647,200 or less) rose to 5.94% last week from 5.80% last week, on loans with a 20% down payment, according to the Mortgage Bankers Association. That’s the weekly average, but there have been a few days where the rate has risen above 6% in another survey from Mortgage News Daily.
“Morning rates edged higher last week as the market continued to reassess the outlook for the economy and the direction of monetary policy, with expectations short-term interest rates rising and falling,” said Mike Fratantoni. at a higher level in the long run”. MBA Senior Vice President and Chief Economist.
As a result, mortgage applications to refinance a home loan fell another 1% for the week and 83% lower than in the same period a year ago. Mortgage rates were just under 3% a year ago and are at record lows for the better of 2021, so there are very few people who haven’t refinanced at much lower rates now.
Mortgage applications to buy a home fell 1% for the week and 23% lower than in the same period a year ago. At higher prices today, a person buying a $400,000 home will pay nearly $700 more per month than it did a year ago.
“Recent economic data will likely stave off any significant decline in mortgage rates in the near-term, but the strong jobs market depicted in August data should support demand.” housing,” added Fratantoni, “There is no sign of recovery in purchase applications however, but a strong job market and an increase in housing inventories should lead to an eventual increase in housing buying activity.”
Mortgage rates have moved even higher since earlier this week, as investors await a series of speeches by Federal Reserve members that could provide more details on how big of the next interest rate hike. Higher mortgage rates have been cooling home prices, but given the magnitude of the increase over the past few years, it will likely have to cool significantly before affordability fully recovers.
