A home is being offered for sale on March 22, 2024 in Chicago, IL
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Mortgage rates didn't move much last week, and for the second week in a row, mortgage demand didn't change either. Potential buyers are constrained by high costs and low supply, and current homeowners have little incentive to refinance at today's high interest rates.
Total mortgage application volume last week was essentially flat, down 0.6% from 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 ($766,550 or less) fell to 6.91% from 6.93%, with points falling to 0.59 from 0.60 (including origination fee) for 20% loans. . Premium.
Home loan refinance applications fell 2% during the week and were 5% lower than the same week one year ago. Interest rates have been hovering around 7% for the past few months, and nearly 90% of current borrowers have mortgages with interest rates below 6%.
Home mortgage applications fell 0.1% from the previous week and were 13% lower than the previous week. Purchasing demand is now about half what it was in March 2020, before the Federal Reserve cut interest rates to zero, sparking a massive home-buying boom, eliminating an already low supply. With prices now twice what they were then, sellers are stuck in place, and buyers can afford much less.
“Higher mortgage rates continued to pressure home purchases. Purchase applications were generally unchanged, although FHA purchases rose slightly during the week,” noted Joel Kahn, MBA economist.
Mortgage rates rose to start this week, after new economic data on manufacturing came in higher than expected and pointed to higher prices.
“Rates are critical right now as inflation is keeping interest rates high,” Matthew Graham, chief operating officer of Mortgage News Daily, wrote. “If inflation refuses to resume the downward path that has been in place until the end of 2023, interest rates will have no compelling reason to rise.”
Wednesday brings more data on growth in the services sector, while the all-important monthly employment report will be released on Friday. Both can create momentum in price in either direction.
