Homes in Rocklin, California, on Tuesday, December 6, 2022.
David Paul Morris | Bloomberg | beautiful images
The average rate on the popular 30-year fixed mortgage exceeded 7% on April 1, according to Daily mortgage news, and it continues like that. It is now at about 7.5%, the highest level since mid-November last year.
Rates hit their highest in decades last October, causing home sales to stagnate. Builders have jumped in at lower prices for their customers and tried to do better than existing home sellers.
Then interest rates dropped in mid-January to the mid-6% range and stayed there through February, causing a surge in home sales. But then they started to rise again.
“In mid-February, rising inflation reset expectations, causing mortgage rates to trend upward again, along with more recent data and comments from the Fed Chairman. [Jerome] Danielle Hale, chief economist at Realtor.com, said Powell only highlighted concerns about inflation. “Sales data over the next few months may reflect the impact of currently higher mortgage rates.”
Still, even with higher interest rates, mortgage applications to buy a home still increased 5% last week compared to the previous week, according to the Mortgage Bankers Association. Seasonally adjusted index. Demand remains 10% lower than the same week a year ago, even as interest rates are now 70 basis points higher than a year ago.
“Despite the higher rate, application activity is still up, possibly as some borrowers decide to take action in case interest rates continue to rise,” said Joel Kan, MBA's chief economist. .
However, that may be short-lived as affordability weakens. While there are more supply on the market now compared to a year ago, it is still very low historically. That has caused homes to move faster as competition increases. Anyone waiting for rates to drop significantly may have to wait a while.
“Recent economic data shows that the economy and job market remain strong, likely to keep mortgage rates at these high levels for a long time,” said Bob Broeksmit, president and CEO of MBA. near future”.
