One type of loan is attracting borrowers as mortgage demand continues to fall. After getting very little interest over the last decade, there is renewed demand for fixed-rate mortgage products.
The Mortgage Bankers Association says total mortgage application volume fell 2% last week compared with the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 6.81% from 6.05% with points increasing to 0.97 from 0.95 for loans with a 20% down payment. It's the highest rate since 2006
The news that job growth and wage growth continued in September is good news for the housing market. Michael Fratantoni, the chief economist of the Mortgage Bankers Association, wrote in a release that there was no chance of a near-term pivot from the Federal Reserve.
The average rate for 5/1ARMs, which has a fixed rate for the first five years, increased slightly, but was still lower. The share of applications was low. At the start of this year, the share was barely 3%, where it had been for a long time.
Fixed-rate loans can be fixed for up to 10 years but they are riskier because the rate eventually adjusts to the market rate. Before rates started to rise, borrowers didn't need to take on more risk because rates have been so low.
Refi applications were down 2% for the week and were down 86% from a year earlier. Black Knight says there are barely 150,000 borrowers who can benefit from a refinance because so many people already have loans at lower rates.
The number of mortgage applications to purchase a home fell 2% for the week. Higher rates have made affordability worse for buyers. Buyers are wary of making such a big investment because of concerns over a recession.
According to a survey from Mortgage News Daily, the 30-year fixed rate is over 7%. The inflation report is going to be released on Thursday. Rates could move either way.
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