A single-family home for sale in Encinitas, California.
Mike Blake | Reuters
Mortgage demand fell to its lowest level since December 2018, even after interest rates fell slightly last week.
Mortgage applications to buy a home fell 1% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume is 14% lower than the same week a year ago.
Despite the slight decline, mortgage rates are still significantly higher than they were earlier this year.
This is because the average contract rate for 30-year fixed-rate mortgages with matching loan balances ($647,200 or less) dropped to 5.33% from 5.46% with a drop to zero. .51 from 0.60 (including principal) for loans with 20% deposit.
“Mortgage rates fell for the fourth time in five weeks, as concerns about weaker economic growth and the recent stock market sell-off have sent bond yields down,” said Joel Kan, an MBA economist. Treasury bills lower.”
Rising interest rates and soaring house prices are taking a toll on affordability. Prices continue to rise because still provide too little market, but different classes of buyers are seeing different pictures.
“Demand is high in the upmarket, and supply and affordability challenges are not as detrimental to these borrowers as it is for first-time buyers,” Kan said.
The average contract rate for 30-year fixed-rate mortgages with large loan balances (greater than $647,200) dropped from 5.02% to 4.93%. Jumbo loans are primarily held in investor and bank portfolios, as opposed to being sold to Fannie Mae or Freddie Mac. Lenders consider them less risky due to the higher credit quality of the borrowers they typically have access to.
Applications to refinance a home loan, which are more sensitive to interest rate fluctuations than purchases, fell 5% for the week and 75% lower than the same week a year ago. Even with interest rates falling to highs in the past few weeks, the need to refinance has yet to return as so many borrowers went through the process when rates were at record lows last year.
Mortgage rates started higher this week, according to a reading from Mortgage News Daily, due to volatility in global markets
“High inflation in Europe and the easing of Covid-related shutdowns in China are both weighing on bonds,” wrote Matthew Graham, CEO of Mortgage News Daily.
