Last week, mortgage rates increased to an average of 6.65% for 30-year fixed-rate loans, up from 6.58%, causing total mortgage application volume to drop by 2.7%. Applications for purchasing homes fell by 7% compared to the previous week and were 2% lower than the same week last year, reflecting ongoing challenges with high home prices and a limited supply of affordable homes.
Conversely, refinance applications rose by 4%, with a notable increase in FHA and VA refinance applications, which grew by 9% and 10%, respectively. The refinance share of total mortgage activity increased to 43.2%. Analysts suggest that the rise in mortgage rates has been influenced by higher fuel prices and a lack of significant rate reductions in recent months.
Despite the higher rates, some borrowers are opting for cash-out refinances to leverage their home equity gains. The recent spike in rates is expected to impact homebuyer demand further, as potential buyers may continue to hesitate in the current market environment