Mortgage demand increases for the first time in six weeks
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Adam Jeffrey | CNBC
The volume of mortgage applications rose last week for the first time in six weeks, according to the Mortgage Bankers Association, despite rising interest rates.
Sharp swings in rates and uncertainty about the general direction of the housing market are likely at play.
The average contractual interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) fell from 6.01% to 6.25%, with points rising from 0.76 at 0.71 (including origination fees) for loans with a 20% decline. Payment.
“Treasury yields continued to climb last week ahead of the Federal Reserve’s September meeting, where they are expected to announce – in their efforts to rein in inflation – another hike. short-term rates,” said MBA economist Joel Kan. , in a press release.
Applications for refinancing a home loan, which are usually very sensitive to large swings in rates, actually rose 10% on the week, although they were still 83% lower than the same week a year ago. . Part of this may be due to the vacation adjustment the previous week. It may also be that the very few remaining borrowers who could benefit from refinancing have finally come out of the close, seeing that rates could climb even higher for the foreseeable future.
“The weekly gain in applications, despite higher rates, underscores the overall volatility at the moment as well as the Labor Day-adjusted results the previous week,” Kan said.
Mortgage applications for the purchase of a home rose 1% for the week, but were 30% lower than in the same week a year ago. Buyers are now seeing less competition in today’s expensive market, so some may jump in when they get the chance. Homes are on the market longer and sellers are much more willing to negotiate than they were three months ago.
Yet prices haven’t come down much yet, and with rates as high as they are now, affordability is historically low. The small weekly gain in demand for mortgages does not really represent the sharp correction underway in home buying.
Mortgage rates have risen again this week, according to a separate Mortgage News Daily survey. It showed the 30-year average rate set just below 6.5% on Tuesday, ahead of the highly anticipated Federal Reserve meeting on Wednesday. Investors will specifically watch comments not about a current rate hike, but about what may be to come.
“The forecast will amplify the volatility that we have already seen with the rate hike decision. [Fed Chairman Jerome] Powell’s press conference still has the potential to add additional volatility,” wrote Matthew Graham, COO of Mortgage News Daily.