Mortgage lenders who depend most on refinance business are having a hard time with rising interest rates. Demand is drying up.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 3.72% from 3.64%, with points decreasing to 0.43 from 0.45 for loans with a 20% down payment. The rate was lower a year ago.
Mortgage refinance applications, which are highly sensitive to daily rate moves, fell for the week and were down by over 50% compared to the same time last year according to the Mortgage Bankers Association. Rates have gone up for five weeks.
After almost two years of lower rates, there are not many borrowers who have an incentive to refinance.
The number of mortgage applications to purchase a home fell 2% for the week, and are 9% lower than a year ago. Some buyers are hoping to get a jump on the spring market, so they are more active than usual. Some people are concerned that they won't be able to afford the home they want because of rising mortgage rates and soaring home prices.
Potential buyers were not allowed in the door to have a look at the offers before they were made at the open house.
We thought that prices would come back to normal after the winter months, but they are not. Rondie Robinson was house hunting with his wife and daughter.
The house was priced around the national median of $375,000, which is where there is a shortage. The average purchase loan size set a new record at $433,500, which is because most of the buying activity is happening on the higher end.
Robinson said he was caught between rising rates and rising prices.
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