Residential real estate for sale signs seen in Washington DC
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Mortgage rates rose for a third straight week last week, reaching their highest level since November. As a result, mortgage application demand fell 2.7% from the previous week, according to the Mortgage Bankers Association's seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased from 7.13% to 7.24%, and the points for loans with a 20% down payment increased from 0.65 (including origination fees) to 0.66.
Mortgage refinance applications, which are the most sensitive to weekly interest rate changes, fell 6% this week and were up 3% compared to the same week a year ago.
Mortgage applications for home purchases fell 1% this week and are down 15% from the same week a year ago, dealing a double blow to potential buyers' purchasing power as home prices rise along with interest rates.
“Purchase applications fell as homebuyers delayed their purchasing decisions due to home-buying challenges and limited supply,” said Joel Kang, deputy chief economist at the MBA.
As is often the case when mortgage repayment capacity deteriorates, the share of adjustable-rate mortgages among mortgage applications last week rose to 7.6%. Adjustable-rate mortgages have lower interest rates and can be fixed for up to 10 years, but are considered riskier.
Mortgage rates have edged lower so far this week, but there hasn't been much economic data to influence them. That could change next week when the all-important monthly jobs report is released.