Mortgage demand fell to its 22-year low this week as rising interest rates and a lack of stocks cooled demand among potential home buyers.
The volume of mortgage applications fell by 6.5% for the week ending June 3 compared to the previous week, according to the latest data from the weekly survey of the Association of Mortgage Bankers.
The decline occurred as the average agreed interest rate on 30-year fixed-rate mortgages with corresponding loan balances rose to 5.40% from 5.33% over the same period. Higher rates are contributing to financial tensions on home buyers, who are facing record prices on the open market.
“The buying market has suffered from persistently low housing stock and rising mortgage interest rates in recent months,” said Joel Kahn, associate vice president of economic and industrial forecasting at the MBA.
“These deteriorating accessibility challenges are particularly difficult for prospective buyers for the first time,” he added.
Housing prices have risen in the last year.Getty Images The lack of inventory has contributed to rising house prices.Getty Images
The MBA Purchase Index, a measure of the volume of home mortgage applications, fell 7% from the previous week and 21% from the same week a year ago.
Refinancing applications also fell, down 6% from last week to a staggering 75% year-on-year.
“While interest rates were still lower than four weeks ago, they remain high enough to stifle refinancing. Only the government’s refinancing increased slightly last week, “Cannes added.
Mortgage rates have risen in recent months as the Federal Reserve initiates its plan to tighten monetary policy by raising reference interest rates. The central bank is seeking to make loans more expensive in a bid to cool the economy and reduce inflation, which has peaked in four decades.
Mortgage interest rates have been rising steadily in recent months. Getty Images
The average interest rate on a 30-year fixed-rate mortgage was 5.23% in May, up from 3.45% in January, according to Freddie Mac. Rising interest rates on mortgages could lead to a drop in house prices as sellers react to the difficult environment.
Housing prices across the country jumped 20.6 percent in March from a year earlier, according to S&P CoreLogic Case-Schiller’s latest housing price index released in May.
The rise was higher than in February, when house prices rose by 20% year-on-year.
Add Comment