7% Rates Hit Weekly Mortgage Demand Hard

7% Rates Hit Weekly Mortgage Demand Hard

Higher mortgage rates are continuing to impact demand among current homeowners and potential buyers, as evidenced by a 5.6% drop in total mortgage application volume last week compared to the previous week. This decline was observed across various types of loans, including FHA and VA refinances, which saw a particularly sharp decrease.

The average contract interest rate for 30-year fixed-rate mortgages slightly decreased to 7.04%, with points increasing slightly to 0.67. However, this rate remains significantly higher than it was one year ago. Consequently, applications for refinancing were 7% lower than the previous week and 1% lower than the same week last year.

Applications for mortgage loans to purchase a home also declined, dropping 5% for the week and 12% from the same week one year ago. Despite this, there was a notable increase in demand for mortgages among buyers looking at newly built homes, which jumped 19% year over year in January. This trend underscores the ongoing challenge of limited inventory in the existing housing market.

The impact of higher mortgage rates is further compounded by the overall economic environment. While the Federal Reserve has held off on raising its benchmark interest rate since July, rates have been on the rise in recent weeks. This increase in rates, coupled with ongoing volatility in the market, is likely to further impact mortgage demand in the coming weeks.

Looking ahead, the housing market may face additional challenges as mortgage rates continue to fluctuate. Homebuyers and sellers alike will need to carefully navigate these changes to make informed decisions about their real estate transactions.

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