Economists largely predict that mortgage rates will soon rise, and anxious home buyers and homeowners are hurrying to take advantage of what could be the last dance with super low mortgage rates, intent on beating further increases.
The average contract interest rate on the 30-year fixed-rate mortgage with conforming loan balances recently increased to its highest level in a month, to 3.18% last week. The rate is 12 basis points higher than a year ago, the Mortgage Bankers Association reported on Wednesday.
Rates jumped after the Federal Reserve’s meeting last week, where the Fed signaled that rate hikes could come in 2023. That is a year earlier than expected.
Applications for refinances increased 3% last week compared to the previous week, and mortgage applications to purchase a home eked out a 1% increase, the MBA reported. Overall, mortgage application volume is down 9% compared to a year earlier.
Applications for home purchases are down 14% compared to a year ago. Higher home prices are pricing out buyers. Existing-home sales posted a fourth consecutive month for drops last month. “Falling affordability is simply squeezing some first-time buyers out of the market,” said Lawrence Yun, chief economist of the National Association of REALTORS®. Read more from NAR’s latest housing report: Hope for Greater Inventory as Home Sales Slip Again