Broken record: Mortgage rates hit 23-year high
Rates’ steady rise send applications to 28-year low
It’s becoming a weekly pattern: mortgage rates go up, applications go down.
Mortgage applications decreased 6.9 percent in the week ending on Oct. 13 from the previous week, according to the Mortgage Bankers Association’s latest report.
In the last full week of September, the average 30-year fixed-rate mortgage was 7.53 percent. Two weeks ago, it was 7.67 percent and last week, 7.70 percent. On the same day the MBA report was published, Mortgage News Daily reported the rate hit 8 percent, the highest level since mid-2000.
The steady rise in rates have bogged down refinancings, which dropped 10 percent from the previous week and 12 percent year-over-year. The seasonally adjusted and unadjusted purchase index declined 6 percent and 5 percent from a week earlier, respectively, and the unadjusted index was down 21 percent from last year.
A decline in mortgage purchases in conjunction with a rise in mortgage rates has become a dominant theme of the housing market. Applications again cratered, sinking to the lowest level since 1995 as surging rates send homebuyers to the sidelines.
The MBA, National Association of Realtors and National Association of Home Builders recently pleaded to the Federal Reserve to ditch further interest rate hikes and any sale of its mortgage-backed securities until the housing finance market stabilizes. The Fed didn’t hike interest rates at the last opportunity, but didn’t rule it out again in the future.
Mortgage rates have risen in six consecutive weeks and the 7.70 percent mark for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) is the highest since November 2000. Mortgage rates haven’t crossed 8 percent since August 2000.
For buyers, high mortgage rates have made affording a down payment difficult, pushing them to the rental market or alternative financing options. For potential sellers who capitalized on the low mortgage rates of the early pandemic period — or even have comparatively lower rates obtained in the last 23 years — the motivation to sell or refinance is limited.