Mortgage demand from homebuyers is nearly half of what it was in 2021

A house sign for sale in front of a house in Arlington, Virginia, November 19, 2020.

Saul Loeb | AFP | Getty Images

Mortgage demand last week fell to nearly half of what it was a year ago, according to the Mortgage Bankers Association, with rates hitting a 21-year high.

Overall, the demand for mortgages is at its lowest level since 1997.

Mortgage applications to buy a home are down 2% from the previous week and 42% lower than the same week in 2021. The annual comparison continues to rise each week, as fewer buyers either want or can enter the very expensive housing market. .

Home loan refinancing requests are down just 0.1% over the week, but only because they were so low to begin with — down 86% from a year ago. There are currently fewer than 150,000 eligible borrowers who can benefit from refinancing at today’s rates, according to Black Knight.

Mortgage rates are down slightly to start this week, but are still above 7% after the start of the year at around 3%. The average contract interest rate for 30-year fixed rate mortgages with matching loan balances ($647,200 or less) increased to 7.16% from 6.94%, with points dropping to 0.88 from 0.95 (including origination fees) for loans of 20%. low paying.

The Federal Housing Administration, which comes with lower rates and smaller down payment requirements, saw a slight uptick during the week.

“Despite higher rates and lower overall application activity, there was a slight increase in FHA purchases, as FHA rates remained lower than conventional loan rates,” said Joel Kahn, an economist at the Mortgage Bankers Association.

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The proportion of homebuyers who applied for adjustable rate mortgages remained more than four times higher than at the beginning of this year. ARM offers lower prices but is considered a riskier product.

High interest rates are also weighing on housing prices. While prices are still higher than they were a year ago, the gains are slow down now at a standard rate. Home buyers are also reconsidering their purchases. Bolt group It reported a 24% cancellation rate in its latest quarterly earnings report on Tuesday and said it expects a higher cancellation rate for the next quarter.

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