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Demand for mortgages declines as interest rates reach a 2-month high
Mortgage applications dropped 4.8% last week due to rising rates and housing shortages, says the Mortgage Bankers Association. The application volume was 26% lower than the same period last year. 30-year fixed-rate mortgages saw an interest rate increase from 6.48% to 6.57%. This market volatility and low inventory have deterred buyers. Additionally, refinancing applications fell 8% last week, a 43% YoY decrease, with elevated rates limiting refinance benefits. Challenges persist for mortgages since the Fed ceased reinvesting in its bond portfolio in late 2022.
As purchasers struggled with high costs and variable mortgage rates, home sales decreased in April
Sales of existing homes dropped by 3.4% in April from March, a decrease of 23.2% YoY. Despite robust demand, factors like limited inventory and fluctuating mortgage rates have affected buyers, leading to variable regional trends. Inventory increased slightly by 1% from last April, with a median price drop of 1.7% at $388,800. Sales fell across all price ranges but were particularly notable for homes priced over $500,000, likely due to affordability rather than supply. First-time buyers accounted for only 29% of sales due to persistent high prices.
Mortgage demand declines once more as rates return to above 7%
The average rate for 30-year fixed mortgages hit 7%, the highest since March, driven by concerns about Federal Reserve's actions and the potential US debt ceiling default. Mortgage applications fell 4.6% last week, with purchase applications 30% lower than the same week a year ago. Refinance applications also dropped 5% and are at a two-month low. These trends are attributed to high rates, scarce housing inventory, and tightened bank lending due to recent failures. Despite a potential resolution to the debt crisis, rates are expected to stay high.
