As one goes up, the other goes down. That’s the clear pattern that’s emerged as mortgage interest rates have climbed back up from this winter’s record lows and measures of mortgage and refinancing demand have dropped, data from the Mortgage Bankers Association (MBA) shows in the chart below.
Rock-bottom interest rates helped fuel a residential real estate boom during the pandemic, but the average rate for a 30-year, fixed mortgage has risen 11 out of the 13 weeks logged this year, last week reaching 3.36%—the highest rate since June (except for two weeks earlier, when it was also 3.36%.). In December, the average touched a record low of 2.85%.
Meanwhile, the MBA’s Market Composite Index, which measures the volume of applications for both purchases and refinances, has fallen 29% since its recent high on Jan. 29. To be sure, there are other factors holding down purchases, including sky-high prices and a threadbare supply of homes for sale, but the increased borrowing costs, while still quite low relatively speaking, are becoming harder to ignore.