Despite Another Mortgage Rate Increase, Homebuyers Keep at It

Mortgage Weekly Update

Interest rates are continuing to rise. This week, the average mortgage rate on 30-year, fixed-rate loans hit 3.56%, according to Freddie Mac. That’s up from 3.45% last week and just 2.77% a year ago,

The jump still hasn’t slowed down mortgage activity, though. Data from the Mortgage Bankers Association shows that overall application volume increased 2.3% this week, driven solely by purchase loans — which rose 8% over the week prior. Refinances, on the other hand, dipped 3%.

“Mortgage rates hit their highest levels since March 2020, leading to the slowest pace of refinance activity in over two years,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.”

The average loan size also hit a new high, clocking in at $418,500. 

“The continued rise in purchase loan application sizes is driven by high home-price appreciation and the lack of housing inventory on the market — especially for entry-level homes,” Kan said. “The slower growth in government purchase activity is also contributing to the larger loan balances and suggests that prospective first-time buyers are struggling to find homes to buy in their price range.”   

More mortgage & housing news

  • According to MBA, just 1.41% of mortgage loans are still in forbearance. That’s down from 1.67% in November and comes to about 705,000 homeowners nationwide.
  • The Census Bureau released the latest residential construction numbers this week, and it’s good news. Permits are up 9% over November and 6.5% compared to December 2020. Starts increased 1.4% for the month.
  • According to a ranking from Realtor.com, Magna, Utah is the best place for first-time buyers this year, with its low employment, ample housing supply, and manageable commutes. Also on the list were Chalco, Nebraska; Mauldin, South Carolina; Beech Grove, Indiana; and Portsmouth, Virginia, among others.

This week in mortgage rates

Rates increased on all loan products this week. Here’s what the average mortgage rate looked for each loan type:

Make sure to check back here next week for the latest mortgage rates and news.

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By Aly Yale / January 20th, 2022 / Categories: / Tags:

Aly Yale

Aly J. Yale is a freelance writer focusing on real estate, mortgage, and the housing market. Her work has been featured in Forbes, Bankrate, The Motley Fool, Business Insider, The Balance, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from Texas Christian University's Bob Schieffer College of Communication with a major in radio-TV-film and news-editorial journalism. Connect with her at AlyJYale.com or on Twitter at @AlyJwriter.