Mortgage rates have increased, with the average contract interest rate for 30-year fixed-rate mortgages rising to 6.79%. This uptick has resulted in a modest 0.8% increase in total mortgage application volume, although applications for home purchases saw only a slight gain of 2% compared to the previous week, remaining 0.2% lower than the same week last year.
The Mortgage Bankers Association noted that the rise in rates is driven by investor concerns about inflation and growing deficits, which are pushing yields higher globally. Additionally, there is a noticeable trend of borrowers opting for adjustable-rate mortgages (ARMs), which accounted for 8% of applications last week, the highest level in five weeks.
The average interest rate for 5/1 ARMs fell to 5.94%. Meanwhile, refinancing applications dropped by 1% week-over-week and are down 19% year-over-year, as high rates discourage most borrowers from refinancing unless they need to access home equity.
Overall, the increase in mortgage rates and the shift towards riskier loans could have significant implications for the housing market and lending practices in the near future