In a new report that was released by the Mortgage Bankers Association, mortgage applications drop giving concern to the current real estate housing boom. Both mortgage purchase applications and mortgage refinance applications have dropped. Rising interest rates are causing big headaches for mortgage lenders, especially those who depend most on refinance business. Demand is simply drying up.
Mortgage refi applications drop
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 3.72% from 3.64%, with points decreasing to 0.43 from 0.45 (including the origination fee) for loans with a 20% down payment. That rate was 77 basis points lower the same week one year ago.
As a result, mortgage refinance applications, which are highly sensitive to daily rate moves, fell 13% for the week and were 53% lower year over year, according to the Mortgage Bankers Association’s seasonally adjusted index. Rates have now been moving higher for five straight weeks.
Mortgage purchase applications drop
Mortgage applications to purchase a home fell just 2% for the week and were 11% lower than a year ago. Buyers are actually more active now than usual, as some are hoping to get a jump on the popular spring market.
With mortgage rates rising, and home prices still soaring, some are concerned they will no longer be able to afford the home they want.
At an open house weekend that we had in Newport Coast, we had over 100 buyers show up and we had a total of 16 offers. We thought that because of the winter months that it would slack off a little bit, prices would start to come back down to normal, but that’s not happening.
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Marcus “Kiwi” Gualter
840 Newport Center Drive, Suite 100
Newport Beach, CA 92660
Cal Bre 01079157
Coldwell Banker Global Luxury
Cal Bre 00616212.
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