This is the most difficult housing market history has seen, so homebuyers need to be prepared for larger mortgages. The average loan application for a purchase loan was just over 2,000 dollars, despite falling mortgage demand due to higher interest rates.

According to the seasonally adjusted index of the Mortgage Bankers Association, mortgage applications for buying a house fell by 1% in the last week. Volume for the week was 7.7% less than that of one year earlier.

Joel Kan, an MBA economist, stated that “Purchase requests saw a slight decline over the past week with most of the decrease being due to government purchase applications.” Prospective buyers continue to face higher sales prices and increased mortgage rates. Another record loan amount of $453,000 was set by the heavier mixture of traditional applications.

As the demand for houses continues to exceed supply, home prices are steadily rising. The increase in prices has been slowing since last summer but is increasing now. According to CoreLogic’s most recent report, prices rose 18.5% in December compared with the previous year.

Average contract interest rates for 30-year fixed rate mortgages (with conforming loan balances of $647,200 or lower) have increased to 4.05%, from 3.83%. Points rose to 0.45, including the origination fee, for loans with 20% down payments. This rate was lower than the previous week by 107 basis points.

Kan said that mortgage rates rose all across the board following the rise in Treasury yields. This was due to increased inflationary pressures as well as increased market expectations for aggressive Federal Reserve policies.

Refinance demand has been severely affected by the sharp increase in mortgage rates during recent months. Applications volume dropped 9% over the past week, and it was 54% higher than that of the previous year. Refinance applications declined to 52.8% from 56.2% last week. This was the lowest point since July 2019.