The pain in the mortgage market is only going to get worse.
The lowest level of mortgage demand since 2000 was reached last week.
The number of applications for a mortgage to purchase a home went down by 9% for the week and were down by 22% for the year to date. With rates almost doubling what they were in January, buyers have lost a lot of purchasing power.
The weakened economic outlook, high inflation and persistent affordability challenges are impacting buyer demand as purchase activity declined for both conventional and government loans.
The picture of rising rates has already taken its toll on buyers. The mortgage rates went up again last week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 5.82% from 5.74% with points increasing to 0.65 from 0.59 for loans with a 20% down payment One year ago, that rate was 3.1%.
For the week, demand for refinances fell 4% and was 80% lower than last year. The drop in demand from home buyers caused the refinance share of mortgage activity to increase from the previous week.
Increasing bond market volatility could cause mortgage interest rates to move very soon. The Fed is expected to raise rates by 75 basis points next week. A basis point is 1 percent.
Matthew Graham, chief operating officer of Mortgage News Daily, said that the policy announcement from the European Central Bank could affect U.S. rates.
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