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The number of people demanding mortgages has dropped dramatically as inflation continues to worsen and mortgage rates have spiked up.
The Mortgage Banker’s Association reports that mortgage applications are down by 6.5% this week, the lowest on record in over 22 years.
Contract interest rates jacked up from 5.33% to 5.40% for 30-year fixed-rate mortgages with loan balances. Up from 0.51, the points for loans that need a 20% down payment are now at 0.60.
Falling another 6% this week, refinance requests feel effects both domestically and abroad due primarily to the country’s economic conditions. The decline in the demand marks another record, which is 75% less than the demand from last year.
“While rates were still lower than they were four weeks ago, they remained high enough to still suppress refinance activity. Only government refinances saw a slight increase last week,” said an MBA economist.
Clearly, the housing market is slowing down. Homebuyer applications for mortgages have gone down 7% in the recent tally, which is 21 percent lower than they were last year during the same period.
The MBA economist added, “The purchase market has suffered from persistently low housing inventory and the jump in mortgage rates over the past two months. These worsening affordability challenges have been particularly hard on prospective first-time buyers.”
Mortgage rates have been on an upward trend for some time now, albeit only by narrow differences; however, a steep increase in mortgage rates primarily imposed by the Federal Reserve greatly affected consumers’ behavior and negatively impacted providers.
“There’s some chance that the upper boundaries of that range end up being a ceiling for rates, but that will depend on inflation and other incoming economic data,” the chief operating officer at the Mortgage Daily News said.
“With a key inflation report set to release on Friday morning, the potential for volatility remains high,” he further explained.