A “For Sale” outside a house in Hercules, California, US, on Tuesday, May 31, 2022. Homebuyers are facing a worsening affordability situation with mortgage rates hovering around the highest levels in more than a decade.
David Paul Morris | Bloomberg | Getty Images
Mortgage rates moved a little bit higher last week, for the second week in a row, but are still in a range that consumers appear to like.
Total mortgage application volume rose 9.9% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. An additional adjustment was made for the New Year’s holiday.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.81% from 6.76%, with points remaining unchanged at 0.61 (including the origination fee) for loans with a 20% down payment. That rate peaked at around 8% in October and was in the 7% range for much of last year.
Applications to refinance a home loan jumped 19% from the previous week and were 30% higher than the same week one year ago. The 30-year fixed rate was 39 basis points higher than it was a year ago, but 26 basis points lower than it was four weeks ago. While there aren’t a lot of borrowers who can benefit from a refinance, given how low rates were just two years ago, those who can are rushing back into the market.
Applications for a mortgage to purchase a home rose 6% for the week but were still 16% lower than the same week one year ago. Buyers continue to contend with limited supply and overheated home prices.
“The increase in purchase and refinance applications for both conventional and government loans is promising to start the year but was likely due to some catch-up in activity after the holiday season and year-end rate declines,” said Joel Kan, an MBA economist in a release. “Mortgage rates and applications have been volatile in recent weeks and overall activity remains low.”
Real estate agents, however, say they are starting to see a new surge in demand from buyers who were sidelined by the higher rate environment. More consumers also said they expect mortgage rates to fall further, according to a recent report from Fannie Mae.
Mortgage rates increased again slightly to start this week, but remain in the 6% range. The next big economic indicator comes Thursday with the release of the monthly Consumer Price Index. If it comes in higher than expected, signaling there is more to do to curb inflation, mortgage rates could move even higher.
