Last week, the 30-year fixed mortgage rate climbed to its highest level since April 2020.
Mortgage Rates Hit 3.7%
The average rate on the most popular 30-year fixed mortgage hit 3.7% at the beginning of last week, according to Mortgage News Daily. Matthew Graham, COO of Mortgage News Daily, indicated that some lenders are still charging 3.625% while others have already begun kicking it up to 3.75%
Mortgage rates are now approaching a full percentage point increase from one year ago. Additionally, the 30-year fixed rate hit its highest level since April 2020.
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Turnaround in Refinance Business
Just a year ago, the refinance slice of the mortgage business was booming due to much lower mortgage rates. Now, the refinance business is struggling. According to its most recent weekly survey, the Mortgage Bankers Association indicate that applications to refinance a home have plummeted -50% from one year ago.
Graham with Mortgage News Daily, said, “While the rapid rate spike is motivating a certain portion of fence-sitters, especially those looking for cash-our refinances, (interest) rates are now becoming a bigger deterrent. In other words, the refi share of the origination market should be taking a substantial hit in forthcoming updates.”
Spike in Mortgage Rates Adding to Record-High Home Prices
Obviously, homebuyers are not doing handstands about rising interest rates. They are dealing with record high rates for both new and existing homes with double-digit increases from one year ago.
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New home buyers are in a particularly precarious limbo-like position. Supply chain delays and labor shortages have extended building completion timelines by weeks and/or months. Lenders won’t lock in firm mortgage rates until they have firm closing dates from builders. New home buyers are being forced to wait for both firm closing dates and firm locked-in interest rates while, by the way, mortgage rates continue to rise.
Buyers of median-priced existing homes (approximately $350,000) are now facing monthly payments at around $125 more than they would have paid only a few months ago. Such interest rate spikes are especially challenging for first-time buyers…many of whom could be priced out of the market altogether.
Thanks to CNBC.
