New home-buying may be taking a hit as the nation’s mortgage rates have now hit their highest level since last November.
According to a seasonally adjusted index published by the Mortgage Bankers Association, the average contract interest rate for a 30-year fixed rate mortgage has hit the 7.2% mark, up from 7.1% last month.
Not surprisingly, the mortgage rate increase has led to a decline of 2.7% in new mortgage applications. The decline, noted Joel Kan, a deputy chief economist with the association, came as “home buyers delayed their purchase decisions due to strained affordability and low supply.”
In a statement, Kan also noted that the adjustable-rate mortgage share of applications has increased to 7.6%, which he said is “consistent with the upward trend in rates, as buyers look to reduce their potential monthly payments.”
Meanwhile, applications for refinancing home loans have just fallen by 6%.
The Mortgage Bankers Association report additionally noted that while the Federal Housing Administration share of total mortgage applications was up to 12.8%, “the Veterans Administration share of total applications decreased to 11.7% from 12.4% the week prior.”
The impact of the mortgage rates increase on home buying remains uncertain. “Despite mortgage rates remaining stubbornly high, most housing market experts expect them to recede over 2024, assuming the Federal Reserve acts on its signaled interest rate cuts,” Forbes is reporting.
But the publication continues: “Whether mortgage rates fade enough to create a meaningful shift in home affordability remains uncertain.”
In a posting on the National Association of Realtors website, Jessica Lautz, deputy chief economist with the group, remarked that the latest rates statistics are revealing a “spring landscape that is taking longer to bloom.”
Noting a mixed bag of economic trends showing an increase in both pending home sales and personal consumption, but also a sluggish Gross Domestic Product, Lautz added: “The bottom line for spring homebuyers is that mortgage rates may show little dramatic downward movement any time soon.”
By Garry Boulard
