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Mortgage demand slides further, even as interest rates pull back slightly

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An advertisement for sale is placed in front of the home listed at $1,000,000 on April 29th, 2022 in San Francisco.

Justin Sullivan | Getty Images

The Mortgage Bankers Association reported that mortgage rates dropped for the second week straight, although it was not enough to drive demand for refinances or new purchase loans.

The rates are much higher now than in the previous two years. The average 30-year fixed rate mortgage interest rate with conforming loan balances of $647,200 and less fell to 5.46% last week. Points dropped to 0.60 (includes the origination fee), for loans that have a 20% downpayment.

Refinance applications for a mortgage were down 2% in the past week, and 75% less than one year ago.

The majority of refinance borrower remain inactive and applications for refinance have declined nine times out of 10 over the past ten weeks. Joel Kan (MBA’s Associate Vice President of Economic and Industry Forecasting) said that refinance activity was down 66% when compared with January 2022.

Also, homebuyers are slowing down. The number of mortgage applications to buy a house was flat from week to week, and it fell 16% compared to a year earlier.

There is more supply, but houses are now sitting longer on the market.

The lows in mortgage demand for homebuyers are now very close to those last recorded in spring 2020. at the start of the Covid pandemic. After that event, homebuying soared quickly and the frenzied market drove prices up at an astonishing rate for the last two years.

These are the high prices of today sidelining potential buyersPeople looking to buy their first house.

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