Last week, mortgage rates rose to an average of 7.49% for 30-year fixed-rate mortgages, up from 7.30%, contributing to a 4.2% drop in total mortgage application volume, as reported by the Mortgage Bankers Association.
Refinancing applications fell by 8% week-over-week and are down 56% compared to the same week last year, with Joel Kan, an economist at the MBA, noting that very few homeowners find refinancing attractive at these rates. Purchase mortgage applications also declined by 2%, with a 15% decrease year-over-year, particularly affecting FHA loans, which saw a 6% drop.
The rising rates have pushed more borrowers towards adjustable-rate mortgages (ARMs), which now represent 10.3% of applications, compared to less than 3% during the pandemic's early years when fixed rates were at record lows.
Although mortgage rates slightly decreased this week, they remain near the highest levels since 2003, prompting analysts to speculate about potential shifts in momentum in the market