Homebuyer mortgage demand is almost half of what it was in 2021

Demand for mortgages fell last week to almost half of what it was a year ago, according to the Swedish Mortgage Association, as interest rates hit a 21-year high.

Overall, mortgage demand is at its lowest level since 1997.

Home purchase mortgage applications fell 2% from the previous week and were 42% lower than the same week in 2021. The annual comparison continues to jump each week as new Fewer and fewer buyers want or can afford to get into this very expensive real estate market. .

Applications for home loan refinancing fell just 0.1% for the week, but only because they were so low to begin with – down 86% from a year ago. There are currently fewer than 150,000 qualified borrowers who can qualify for refinancing at today’s rates, according to Black Knight.

Mortgage rates have fallen slightly to start this week, but are still well above 7% after starting the year at around 3%. The average contract rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased from 6.94% to 7.16%, with points increasing from 0.95 to 0.88 (including origination fees) for loans with a decrease of 20%. Payment.

Federal Housing Administration loans, which come with lower interest rates and lower down payment requirements, saw an increase during the week.

“Despite higher interest rates and lower overall demand activity, there was an increase in FHA purchase inquiries as FHA rates remained lower than conventional lending rates,” said Joel Kan, economist at the Mortgage Bankers Association.

The proportion of home buyers applying for adjustable rate loans remained high at more than four times what it was at the beginning of this year. ARMs offer lower prices but are considered a riskier product.

High interest rates also weigh on house prices. Although prices are still higher than a year ago, the increase is now slowing at a record pace. Homebuyers are also rethinking their purchases. Pulte Group reported a 24% cancellation rate in its latest quarterly report Tuesday and said it expected an even higher rate for the next quarter.

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