Mortgage rates continued to climb higher last week, causing both current homeowners and potential homebuyers to retreat from the market, especially first-time buyers. Total mortgage application volume fell 4.4% compared with the week before, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, increased to 6.45% from 6.37%, with points rising to 0.66 from 0.61, including the origination fee, for loans with a 20% down payment.
“The ongoing conflict in the Middle East continues to push rates higher. Mortgage rates last week increased to their highest level in a month,” said Joel Kan, vice president and deputy chief economist at the MBA, in a release.
Applications for a mortgage to purchase a home dropped 4% for the week and were just 5% higher than the same week one year ago. The spring housing market has been a bumpy one, starting out very slowly when rates rose sharply in March. It seemed to be picking up recently, as rates fell back and more supply came on the market, but buyers again are struggling with affordability.
“The average loan size on a purchase application increased to $467,300, the highest in the survey’s history dating back to 1990. This increase could indicate that potential first-time buyers, and buyers looking for homes at lower price points, might be the most hesitant to move forward given the economic uncertainty and higher rates,” said Kan.
