Homebuyer Demand Remains Strong, Despite Rising Mortgage Rates
Mortgage rates rose yet again, dampening refinance demand significantly.
According to the latest data from the Mortgage Bankers Association, the average rate on a 30-year, fixed-rate loan now clocks in at 3.36% — up 0.50 since the start of 2021. As a result, refinancing demand is now down 5% compared to last week and 13% over a year ago. Refinances are currently at their lowest point since September 2020.
Fortunately, it seems higher rates aren’t stifling purchase demand. Purchase loan applications jumped 3% for the week, and compared to 2020’s numbers, activity is up 26%.
“Purchase applications were strong over the week, driven both by households seeking more living space and younger households looking to enter homeownership,” said Joel Kan, associate vice president of economic and industry forecasting at MBA. “The average purchase loan balance increased again, both by quickening home-price growth and a rise in higher-balance conventional applications.”
That last bit — rising home prices — coupled with low housing inventory, dwindling construction, and higher interest rates, could put a damper on purchase activity as the year goes on.
As Kan puts it, “We may see affordability challenges become more severe if new and existing supply does not significantly pick up.”
More in mortgage and housing news
- The Census released new home sales data this week, and sales of single-family homes were down 18.2% in February. The median sale price was $349,500.
- Mortgage delinquencies increased for the first time nine months, according to Black Knight. The increase was biggest on early-stage delinquencies — those at least 90 days past due but not in foreclosure just yet.
- The share of mortgage loans in forbearance fell to 5.05% of all mortgage loans. According to MBA, about 2.5 million homeowners are still on a forbearance plan.
This week in mortgage rates
Mortgage rates rose on all loan types, with the exception of 5/1 ARMs. Those saw rates drop ever so slightly over the week.
Here’s how rates looked for each loan type:
- Conforming 30-year, fixed-rate loans: 3.36% (up from 3.28%)
- Jumbo loans: 3.40% (up from 3.34%)
- FHA 30-year, fixed-rate loans: 3.35% (up from 3.25%)
- 15-year, fixed-rate loans: 2.72% (up from 2.67%)
- 5/1 adjustable-rate loans: 2.79% (up from 2.82%)
Make sure to check back here next week for the latest mortgage news.
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