A home for sale in Susanville, CA.
Gary Coronado | Los Angeles Times | beautiful pictures
Rising interest rates are causing major headaches for mortgage lenders, especially those most dependent on the refinancing business. The demand is simply exhausted.
The average contract rate for 30-year fixed-rate mortgages with matching loan balances ($647,200 or less) increased to 3.72% from 3.64%, with the score falling to 0.43 from 0.45 (including principal) for loans with 20% down payment. That rate was 77 basis points lower the same week a year ago.
As a result, mortgage refinance applications, which are highly sensitive to daily interest rate fluctuations, fell 13% on the week and 53% lower year-over-year, according to the seasonally adjusted index of Mortgage Bankers Association. Rates have now moved higher for five consecutive weeks.
Joel Kan, an MBA economist, wrote in a press release: “After nearly two years of lower interest rates, not many borrowers have an incentive to refinance. “For those who are still entering the market for refinancing, these higher rates are proving much less attractive to them.”
Mortgage applications to buy a home are down just 2% for the week and 11% lower than a year ago. Buyers are indeed more active than usual, as some hope to take a leap in the popular spring market. With mortgage rates rising, and home prices still soaring, some people fear they will no longer be able to afford the home they want.
At an open house last Sunday in Waldorf, Maryland, there were three offers before potential buyers even got in to view.
Rondie Robinson, family hunting with wife and daughter.
That home is valued just above the national average, at $375,000, which is where supply is falling. Most of the buying is happening at the higher end, which is why the average buyout loan size set another record at $433,500.
Robinson added: Between rising rates and rising prices, “I’m stuck between a rock and a hard place.
