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The housing market doesn’t appear to be following its typical seasonal slowdown this winter. Home buyers appeared in a rush last week, with economists crediting rising mortgage rates.
Mortgage rates moved to their highest level in more than a year, the Mortgage Bankers Association reports. Buyers who are already facing higher home prices are watching mortgage rates closely as they affect what shoppers can afford.
Mortgage purchase loan applications increased 2% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Purchase applications, however, are 17% lower than the same week a year ago, but real estate pros say that is primarily due to low inventories of homes for sale. They reported to CNBC anecdotally higher-than-normal activity in early January from home shoppers.
The MBA reports that the average contract interest rate for a 30-year fixed-rate mortgage for conforming loan balances rose to 3.52%, up from 3.33% the previous week. That marks the highest contract rate since March 2020.
“Mortgage rates increased significantly across all loan types last week as the Federal Reserve’s signaling of tighter policy ahead pushed U.S. Treasury yields higher,” says Joel Kan, an MBA economist. “The housing market started 2022 on a strong note. Both conventional and government purchase applications showed increases, with FHA purchase applications increasing almost 9%, and VA applications increasing more than 5%.”