Mortgage demand falls for the first time in five weeks as interest rates rise

Mortgage rates rose significantly last week, reducing overall demand for mortgages.

Total application volume fell 0.7% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. It was the first decrease in five weeks.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased from 6.67% to 6.75%, with points remaining at 0.66 (including origination fees) for loans with 20% down payments. . The rate was just 8 basis points higher than the same week a year ago.

The driving force behind the decline was demand for refinancing. Although it fell 3% for the week, it was still 41% higher than the same week last year. Mortgage rates aren’t that much lower now than they were a year ago, but there are generally so few refinances that even a small movement can make a big comparison.

The number of applications for mortgages to buy homes increased by 1% for the week, and by 6% compared to the same week last year.

“Purchasing activity increased on a weekly and annual basis this week, driven by traditional purchase requisitions and VA requisitions,” said Joel Kang. “Buyers remained active in the purchasing market.” , MBA Vice President and Deputy Chief Economist.

Mortgage rates have remained roughly flat this week as the market awaits Wednesday’s Federal Reserve meeting, according to a separate Mortgage News Daily survey. A rate cut is expected, but some analysts say it may be the last one for a while.

“The market is betting that the Fed will cut rates and that the Dot Plot (a survey of interest rate outlooks that bonds closely monitor that is updated quarterly) points to a higher interest rate trajectory than in September,” said Matthew Graham, chief operating officer at MND. I know what to show.” “What we don’t know is how bleak the dot plot is or how hawkish the market will accept a Powell chairman.”