Mortgage rates rose for the sixth consecutive week last week, and demand for mortgages fell to the lowest level since 1995.
Total application volume fell 6.9% compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased by 0.75 points (including origination fees) from 7.67% to 7.70% for loans with 20% down payments. . This is the highest interest rate since November 2000. The interest rate for the same week a year ago was 6.94%.
The number of applications for mortgage loans to buy houses decreased by 6% from the previous week and by 21% compared to the same week last year.
Mortgage refinance applications fell 10% for the week and 12% from the same month last year.
“Both purchase applications and refinance applications decreased due to a significant drop in traditional applications,” Joel Kang, vice president and deputy chief economist at MBA, said in a release. He added that the share of adjustable rate mortgages (ARMs) was 9.3%, the highest share in 11 months.
ARMs offer lower rates and can be locked in for up to 10 years before the rate resets. As both interest rates and home prices rise, more borrowers are turning to these loan products to gain purchasing power.
Mortgage rates have risen further this week, with the 30-year fixed rate hitting 7.92% on Tuesday, according to Mortgage News Daily. It’s a cyclical high. This increase was due to monthly retail sales that were significantly higher than expected.
