Interest rates are back on their upward trajectory again because the economic damage from the omicron variant of the coronaviruses is expected to be less than previously thought. The Mortgage Bankers Association's index shows that mortgage demand fell in the last two weeks of the year.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 3.33% at the end of last week from 3% two weeks before, with points rising to 0.48 from 0.38 for loans with origination fees. The rate was lower a year ago.
Last week, applications to refinance a home loan fell 2% compared with two weeks ago and were 40% lower than a year ago. The share of mortgage activity that was refi increased to 65.4% of total applications from 63.9% the previous week due to continued weakness in the purchase loan market.
The markets maintained an optimistic view of the economy and mortgage rates continued to rise over the past two weeks. Many borrowers refinanced in 2020 and early 2021.
The Mortgage News Daily calculates daily rates as opposed to weekly averages and says that rates rose sharply Tuesday to the highest level since April of last year.
The number of applications for mortgages to purchase homes fell from two weeks earlier. It was the weakest showing since October. Home sales began to pull back in November because of low inventory. Home prices increased by 18% in November, according to Core Logic.
The year was a record for purchase originations. The total purchase activity is expected to reach $1.74 trillion in 2022, according to theMBA.
