- The average contract interest rate for 30-year fixed-rate mortgages increased to 2.98% from 2.96% last week.
- Total mortgage application volume fell 5.1% last week from the previous week, according to the Mortgage Bankers Association.
- Applications to refinance a home loan fell 5% for the week.
- Mortgage applications to purchase a home fell 6% for the week.
Another week of rising rates spurred homeowners and buyers to pull back from the mortgage market, and the trend is not expected to turn any time soon.
Total mortgage application volume fell 5.1% last week from the previous week, 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 ($548,250 or less) increased to 2.98% from 2.96% for loans with a 20% down payment. That rate was 79 basis points higher the same week a year ago.
"Expectations of faster economic growth and inflation continue to push Treasury yields and mortgage rates higher. Since hitting a survey low in December, the 30-year fixed rate has slowly risen, and last week climbed to its highest level since November 2020," said Joel Kan, MBA's associate vice president of economic and industry forecasting. The association began its weekly survey in March 1990.
Applications to refinance a home loan, which are highly sensitive to weekly interest rate fluctuations, fell 5% from the previous week but were 51% higher than a year ago. That annual comparison, however, was twice as large just a few weeks ago, before rates rose. The refinance share of mortgage activity decreased to 69.3 percent of total applications from 70.2 percent the previous week.
Mortgage applications to purchase a home fell 6% for the week and were 15% higher than a year earlier. Purchase volume is falling less because of higher rates and more because of the record low inventory of homes for sale.
Prices are also rising at the fastest rate in over six years. The average purchase loan size hit another survey high at $412,200, partly due to higher home prices but also due to a large drop in FHA loan applications. FHA mortgages, which offer a low down payment, are a favorite of first-time buyers at the entry level of the market. The inventory shortage is also most acute at the low end.
Mortgage rates continued their climb to start this week, loosely following the yield on the 10-year Treasury. On Tuesday, mortgage rates rose at their fastest pace in several months.
"At a certain point market momentum becomes its own justification and bond prices snowball to lower and lower levels," wrote Matthew Graham, chief operating officer at Mortgage News Daily. "When bond prices fall, rates rise."