Contractors work on concrete slabs in the Cielo at Sand Creek by Century Communities housing development in Antioch, Calif., Thursday, March 31, 2022.
David Paul Morris | Bloomberg | Getty Images
The average rate on the popular 30-year fixed-rate mortgage broke the 7% mark on Tuesday, according to Mortgage News Daily. This is the highest level since early March.
Rates rose due to a combination of concerns among investors. First, uncertainty about what the Federal Reserve will do with interest rates, given a still strong economy; second, the battle over raising the debt ceiling and the possibility of a US default.
In both cases, rates have already risen last week as demand for mortgages has fallen. Total mortgage application volume fell 4.6% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
Last week, the average weekly contractual interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) rose to 6.69% for loans with a 20-year down payment. %, according to the MBA. This rate was 5.46% the same week a year ago.
Mortgage applications for buying a home fell 4% for the week and were 30% lower than the same week a year ago.
“Because rates have been so volatile and inventory to sell is still scarce, we have yet to see sustained growth in buying requests,” said Joel Kan, vice president and deputy chief economist. of the MBA.
Home loan refinance applications were down 5% from the previous week and 44% from the same week a year ago. This is the lowest level in two months. Not only are there very few borrowers who could benefit from refinancing, given that rates were so much lower a year ago, but banks have tightened lending due to recent bank failures.
Even if the debt crisis is resolved before a default, rates don’t have much reason to drop significantly anytime soon.
“Credit to the gradual improvement in bank sentiment, mixed but resilient economic data and a Federal Reserve that has been steadfast in its reminders of their ‘higher rates for longer’ mantra,” wrote Matthew Graham, chief financial officer. operating at Mortgage News Daily.