Mortgage refinancing falls to 22-year low

Mortgage rates rose even higher last week after the Federal Reserve signaled that it would continue its aggressive inflation control efforts. That, and growing uncertainty in the broader housing market, saw mortgage applications fall 3.7% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

After a bizarre bounce a week earlier, mortgage refinancing applications were down 11% for the week and were 84% lower than the same week a year ago. They are now at a 22-year low because very few borrowers can benefit from refinancing at today’s higher rates.

The average contractual interest rate for 30-year fixed-rate mortgages with a qualifying loan balance ($647,200 or less) increased to 6.52% from 6.25%, with the interest rate increasing to 1.15 from 0 .71 (including issuance fee) for loans from 20% down. payment. This is the highest level since mid-2008.

“After a brief pause in July, mortgage rates have risen by more than a percentage point over the past six weeks,” said Joel Kahn, MBA associate vice president of economic and industry forecasting. “Continued uncertainty about the impact of the Fed’s cuts to its MBS and treasury holdings adds to mortgage rate volatility.”

Mortgage applications to buy a home were down 0.4% on the week and were 29% lower than the same week a year ago. Potential buyers are still struggling with high prices today, although annual price increases are now shrinking at a record pace.

Due to the recent surge in rates, the share of adjustable rate mortgages has reached 10% of applications and nearly 20% of dollar volume as ARMs offer lower interest rates and can be fixed for up to 10 years.

Mortgage rates continued to rise this week, topping 7% from a 30-year fixed rate of 7.08%, according to a separate survey by Mortgage News Daily. This is the highest figure in the last 20 years.

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