Mortgage Interest Rates Hit Highest Point in 2 Years, Applications Fall as a Result
Mortgage interest rates are now at their highest point since January 2020. According to Freddie Mac, the average rate on 30-year mortgages hit 3.69% this week — up from 3.55% the week prior and the highest we’ve seen since pre-pandemic.
The jump has already impacted mortgage activity, which fell 8.1% last week. Purchase loan applications decreased 10%, according to the Mortgage Bankers Association, while refinances were down 7%.
According to Sam Khater, chief economist at Freddie Mac, these declines will probably continue as the year (and the trend of rising interest rates) goes on.
“The normalization of the economy continues as mortgage rates jumped to the highest level since the emergence of the pandemic,” Khater said. “Rate increases are expected to continue due to a strong labor market and high inflation, which likely will have an adverse impact on homebuyer demand.”
Rising home prices could also cause a pullback in applications. MBA’s data shows that last week notched the highest average loan size on record — $446,000.
More in mortgage & housing news
- According to Fannie Mae, only 25% of Americans say it’s a good time to buy a house — the lowest level on record. Almost 70% said it’s a good time to sell.
- The market’s inventory struggle continues. According to Realtor.com, new listings are down 7% compared to this time last year. New listings have trended downward for 10 of the last 12 weeks.
- A new report from Redfin shows vacation home demand is up nearly 90% since pre-pandemic days. In fact, demand for second-home mortgages is actually outpacing that of primary residences.
This week in mortgage interest rates
Interest rates rose on all loan products this week, with ARMs clocking the largest uptick (19 basis points).
- Conforming 30-year, fixed-rate loans: 3.69% (up from 3.55%)
- 15-year, fixed-rate loans: 2.93% (up from 2.77%)
- 5/1 adjustable-rate loans: 2.80% (up from 2.71%)
Make sure to check back here next week for the latest mortgage interest rates and news.
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