Mortgage applications declined 3.1% from the previous week as the average interest rate for FHA-backed mortgages increased to 7.02%—the highest in almost 21 years—according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey.
Rates Continue to Rise
The decrease in applications comes as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances jumped to 7.09% from 6.93%, closing in on levels comparable to last November. However, the average rate for FHA-backed mortgages increased to 7.02% from 6.85% the previous week, soaring to levels not seen since 2002.1
A combination of factors, including the recent credit ratings downgrade for the U.S., pushed rates higher.
“Treasury yields rose last week, and mortgage rates followed suit, due to a combination of the Treasury’s funding announcement and the downgrading of the U.S. government debt rating,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.1
Consumers Feel Priced Out of the Market
Despite rising mortgage rates, the market is still competitive, thanks to strong demand and tight inventory, partly because those who bought homes at record-low pandemic rates choose not to sell.
As a result, many aspiring homeowners continue to be priced out of the market. According to Fannie Mae, 82% of consumers feel that it’s a “bad time to buy” a home, a new survey high, up from 78% in June.
“We have not seen much movement in the ‘good time to sell’ component over the last few months, an indication that the current low levels of existing homes for sale will likely continue to persist in the near term,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.2
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Source: www.investopedia.com
ENB
Sandstone Group
