A person walks into a Bank of America branch in New York.
Scott Mill | CNBC
Mortgage rates rose again last week, throwing even more cold water on demand from both current homeowners and potential home buyers. Weekly application volume fell 0.1% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages ($647,200 or less) rose from 7.06% to 7.14%.
“Mortgage rates rose last week on news that the Federal Reserve would continue to raise short-term rates to combat high inflation. The 30-year fixed rate was above 7 percent for a third week in a row, with gains across most loan types,” he said. Joel Kahn, Deputy Chief Economist, MBA.
Refinancing demand, positively crushed by a sharp rise in interest rates, fell another 4% for the week and was down 87% compared to the same week a year ago. Mortgage rates started around 3% this year, so there are very few borrowers who could benefit from refinancing at today’s high rates. Demand for refinancing is now at a 22-year low.
Mortgage applications to buy a home rose 1% on the week. While this isn’t a huge move, it’s the first increase in six weeks. Purchase demand, however, is down 41% from a year ago and is close to a seven-year low.
The adjustable-rate mortgage (ARM) share of activity increased to 12% of all applications. ARMs offer lower interest rates, and while they are considered riskier loans, their rates can be fixed for up to 10 years.
Mortgage rates have been moving sideways to start this week, but that could change on Thursday as investors await the October reading from the government’s consumer price index.