Weekly Mortgage Demand Dips Following Increase In Rates

Weekly mortgage demands dipped after interest rates started increasing again last week. While the noted increase did not even reach 1%, it still created an immediate effect on mortgage demand, which had already started strengthening over several weeks.

According to CNBC, the 30-year fixed-rate mortgage with conforming loan balances of $766,550 or less saw an increase in interest rate from 7.01% to 7.05%, with points increasing from 0.60 to 0.63, which already includes the origination fee for loans with a 20% down payment.

The abovementioned increase was the first in four weeks, and the rate was an average. Rates once more fell back to the 6% range before rising again in the second half of the week.

This increase resulted in a drop in mortgage applications. The Mortgage Bankers Association's adjusted index showed that the total volume of mortgage applications fell by 5.7% compared to the previous week.

In a release, MBA economist Joel Kan said that both purchase and refinancing applications have fallen due to the interest rates. Kan said it was "pushing overall activity to the lowest level since early March."

He also said that borrowers are quite sensitive to small increases in interest rates, which creates an impact on the refinance market and also on the volume of purchase applications, which was lower than the level the previous year.

Both refinance demand and mortgage applications dipped, with the former plunging by 14% and the latter falling by 1%. However, if one compares the figures with the same week about a year ago, refinance demand was still higher by 12% while applications for mortgages were 10% lower, revealed NBC News.

"There continues to be limited levels of existing homes for sale and many buyers are struggling to find listings in their price range that meet their needs," Kan added further.