Weekly Mortgage Demand Dips as Rates Climb Again

Mortgage demand has hit a three-month low as rates start to climb once more. The average interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to $766,550) edged up to 7.05% from 7.01%. This uptick followed a brief period of lower rates throughout much of May.

This slight increase, the first in four weeks, caused a noticeable shift in mortgage activity. Rates had dipped into the high 6% range but shot up in the second half of the week. Consequently, total mortgage application volume dropped by 5.7% last week, according to the Mortgage Bankers Association’s seasonally adjusted index.

Joel Kan, an economist at MBA, noted, “Both purchase and refinance applications fell, pushing overall activity to the lowest level since early March. Borrowers remain sensitive to small rate increases, impacting the refinance market and keeping purchase applications below last year’s levels.”

Refinance applications, which had been on a recovery path, plunged 14% for the week but still showed a 12% increase compared to the same week a year ago. Meanwhile, applications for home purchases dropped by 1% for the week and were 10% lower than a year ago.

Kan also highlighted ongoing challenges in the housing market: “There continues to be limited levels of existing homes for sale, and many buyers are struggling to find listings in their price range that meet their needs.”

Adding to the rate increase, mortgage rates jumped sharply at the start of this week, rising 12 basis points on Tuesday alone. This followed remarks from Minneapolis Federal Reserve President Neel Kashkari, who stated that he needs to see “many more months of positive inflation data” before feeling confident about dialing back interest rates.

Stay tuned for more updates as the market continues to evolve!

Info originally read on NBC news.