WASHINGTON–Mortgage loan applications: they were down 23% during the week ending Sept. 2 versus the same week one year earlier, according to the Mortgage Bankers Association.
And in another sign of the cooling mortgage market, applications to refinance a home loan fell another 1% for the week and were 83% lower than the same week one year ago.
The reason, as every credit union is aware: rising rates.
The result has been sellers sharply decreasing prices in the once-hot housing market and an increase in the number of home sales falling through, which has led to a return of contingencies, according to real estate analysts.
“Mortgage rates moved higher over the course of last week as markets continued to re-assess the prospects for the economy and the path of monetary policy, with expectations for short-term rates to move and stay higher for longer,” said Mike Fratantoni, MBA SVP-chief economist with the Mortgage Bankers Association, in a statement. “With the 30-year fixed rate rising to the highest level since mid-June, application volumes for both purchase and refinance loans dropped.”
Rates Not Going to Drop
According to Fratantoni, lower volume of mortgage applications doesn’t mean mortgage rates will be coming down any time soon for two reasons: strong job growth and high levels of inflation, he said.
The average contract rate for 30-year fixed-rate mortgages with conforming loan balances, or homes sold for $647,200 or less, was 5.94% for the week ending Sept. 2. It was 5.8% the week before, according to the MBA.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (more than $647,200) increased to 5.4% from 5.32% in the same period, the organization added.
Housing Prices
Meanwhile, the Federal Reserve Bank of St. Louis released new data showing home prices rose to $525,000 in Q2, up from $374,500 during the second quarter of 2020.
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