Mortgage rates are going up, which is hitting potential homebuyers. According to the Mortgage Bankers Association, total mortgage applications decreased last week to the lowest level since December. The number of applications to refinance was lower than a year ago.
The associate vice president of economic and industry forecasting at the Mortgage Bankers Association said that higher mortgage rates have quickly shut off refinances.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 4% from 4%, with points rising to 0.48 from 0.45 for loans with a 20% down payment.
Those higher mortgage rates combined with high prices and low inventory pushed applications to purchase a home down 10% weekly and 6% yearly. Purchase applications fell for the third week in a row.
The average purchase loan size in the weekly survey was $450,200, which was close to the survey's record high of $453,000.
Home prices didn't let up in 2021. Craig J. Lazzara, managing director at S&P DJI, said that the highest calendar-year increase in 34 years was registered in 2021. In the year 2021, prices were up 18.8%, compared to a 10.4% gain in 2020.
Some buyers will find it difficult to get a mortgage due to rising mortgage rates. Lazzara predicts that price growth will slow down.
Lazzara said that the strength in the U.S. housing market is being driven by a change in locational preferences. He said that we should soon see the impact of increasing mortgage rates on home prices.
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