Mortgage Interest Rates Inch Toward 5%
Mortgage interest rates continue to rise, inching closer and closer to 5%. According to Freddie Mac, the average rate on 30-year loans was 4.72% this week, up from 4.67% last week and a whopping 159-basis-point jump over a year ago.
Applications to both purchase a home and refinance declined as a result. Purchase activity was down 3% for the week, according to the Mortgage Bankers Association, with FHA applications down 8% on their own.
“The hot job market and rapid wage growth continue to support housing demand, despite the surge in rates and swift home-price appreciation,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “However, insufficient for-sale inventory is restraining purchase activity. Additionally, the elevated average purchase loan size and steeper 8% drop in FHA purchase applications are both indicative of first-time buyers being disproportionately impacted by supply and affordability challenges.”
Refinances also fell this week, dropping 6% from the week prior. Refinances accounted for just under 39% of all loan activity — a 51% drop compared to this time last year.
As Kan explained, “As higher rates reduce the incentive to refinance, application volume dropped to its lowest level since the spring of 2019.”
More in mortgage & housing news
- CoreLogic released its latest Home Price Insights report this week, and according to the data, the company’s forecasting a major slowdown in home-price growth by February next year. The report shows that home price growth will likely end February 2023 with just a 5% annual uptick — a significant drop from the 20% rise we’re seeing now.
- That same report also bodes well for the market’s supply issue. According to survey respondents, 64% of homeowners planning to sell this year expect to list within the next six months (and some have already listed).
- According to a Realtor.com home selling report, nearly 28% of recent buyers were willing to skip repairs and other concessions to win out, while another quarter waived contingencies. A whopping 23% said they received an all-cash offer.
This week in mortgage interest rates
Mortgage interest rates increased across the board again this week. Here’s how those rates break down by loan type:
- Conforming 30-year, fixed-rate loans: 4.72% (up from 4.67%)
- 15-year, fixed-rate loans: 3.91% (up from 3.83%)
- 5/1 adjustable-rate loans: 3.56% (up from 3.50%)
Check back next week for the most up-to-date mortgage and housing news.
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