The demand for mortgages from homebuyers is at its lowest level in 28 years.
Last week, mortgage rates went up again, putting buyers back on the sidelines just as the spring housing market should be picking up.
The Mortgage Bankers Association’s seasonally adjusted index shows that the number of mortgage applications to buy a home dropped by 6% last week compared to the week before. Volume was 44% lower than it was during the same week last year, and it is now at its lowest level in 28 years.
This is because the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) went up from 6.62% to 6.71%, and points for loans with a 20% down payment went up from 0.75 to 0.77 (including the origination fee). Since November of last year, that is the highest rate.
In just the last month, mortgage rates have gone up by 50 basis points. Rates were around 4% in February of last year.
“Inflation may not be going down as quickly as expected, based on data on employment and economic activity,” said MBA economist Joel Kan. “This is putting upward pressure on rates.”
The number of requests to refinance a home loan fell by 6% last week and by 74% from the same time last year.
“Refinance applications make up less than a third of all applications and stayed more than 70% behind last year’s pace, as most homeowners are already locked into lower rates,” Kan said.
Mortgage rates haven’t changed much so far this week, but it looks like they’re going up again after a short break in January. Lower rates at the beginning of the year caused a short surge in homebuying, but the demand for mortgages from homebuyers seems to point to a very slow spring.