Mortgage Demand from Homebuyers Drops 12% Week to Week
Interest rates have taken their toll on homebuyers...
Last week we witnessed a slight decline in mortgage rates but the damages are already taking an effect on housing affordability. Refinance and purchase loan demand has dropped which pulled the total mortgage application volume below 11% on the week.
Week to week, the application to purchase a home declined 12% and surprisingly 15% lower compared to the same week one year ago. Homebuyer demand has experienced its first weekly drop since the third week in April. Mortgage rates have risen 2 full percentage points since the start of the year as home prices are up 20% compared to a year ago.
30-year fixed-rate mortgage interest rates with conforming loan balances have decreased to 5.49% from 5.53% and points increased 0.74 from 0.73 for loans with a 20% down payment.
However, inflation isn’t aiding in the feeling of confidence of consumers. Joel Kan, an MBA economist said, “General uncertainty about the near-term economic outlook, as well as recent stock market volatility, may be causing some households to delay their home search.”
Refinance applications have continued to dwindle as they have shed another 10% week to week. Compared to the same week one year ago, refinance demand is sitting at 76% lower. A refinancing boom was caused due to the two years of record-low interest rates during the Covid pandemic. The adjustable-rate mortgage share of total applications has remained higher at 10.5%. At the start of this year, it was 3%.
The nation’s homebuilders have reported a drop in both buyer traffic and current sales conditions. Builder sentiment has also dropped to the lowest level in nearly two years.