Rising interest rates are seriously discouraging mortgage borrowing, and it’s not just refinancing.
As the chart below shows, the volume of overall mortgage applications has fallen sharply, hitting its lowest point since December 2019 last week, according to the Mortgage Bankers Association’s index of mortgage activity.
Refinancing applications continued to drop off sharply (down 29% since the start of the year), data from the Mortgage Bankers Association shows. That’s no big surprise given the recent rise in mortgage rates, since one of the main reasons homeowners refinance their loans is to get a better rate, and fewer borrowers could still get a better rate as rates head north.
What may be more notable is that applications from those buying a home dropped for a third straight week, falling 20% in just those three weeks. It’s a sign that high prices and a dearth of choices are making it even harder to swallow higher borrowing costs, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting.
The average rate for a 30-year fixed mortgage is now 4.06%, according to the group’s measure, more than a full percentage point higher than the 2.85% record low reached in December 2020 and significantly higher than the 3.33% seen as recently as the end of last year.
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