According to the seasonally adjusted index from the Mortgage Bankers Association (MBA), the total volume of mortgage applications was 52.7% lower last week than one year ago. The combination of sky-high home prices and a shortage of houses for sale leads to a severe downturn.
Last week, the average fixed 30-year mortgage interest rate for conforming loans with a balance of $647,000.0 or less increased from 5.40% to 5.65%. The middle point rose to 0.71 (including the origination fee) for loans with a conforming loan balance of $647,200 or less.
Joel Kan is an MBA economist who stated that mortgage rates rose due to higher than anticipated inflation and expectations that the Federal Reserve would increase rates more quickly.
The weekly volume of mortgage applications increased slightly compared to the holiday-adjusted weeks before. Refinance demand for this week was up 4% but was 76% lower than one year ago.
This week, there was an 8% rise in mortgage applications from homebuyers. However, they were 16% less than a year ago.
Despite the rate rise, Kan said that application activity rebounded following the Memorial Day holiday but was 0.29 per cent lower than pre-holiday levels.
The housing market is struggling in an ever-increasing interest rate environment. Redfin and Compass, major real estate brokerages, announced Tuesday that they would be cutting back their staff.
“Mortgage rates have risen faster than ever before in history. Redfin CEO Glenn Kelman said that $8 per share would not be enough to make a company go through hell. “