Demand Slows As Mortgage Rates Rise

According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage rates rose across all loan categories last week, including 30-year fixed-rate loans with both conforming and jumbo balances, mortgages backed by the Federal Housing Administration, and 15-year fixed-rate loans. The increase caused refinance demand to slow. In fact, refinance activity fell 3 percent from the week before and was just 60 percent of total mortgage activity. Still, the seasonally adjusted purchase index rose 2 percent and is now 2 percent above year-before levels. Also in the report, among purchase applications, the average loan size hit an all-time high last week, rising to $294,900. This indicates that the high-end of the market is least affected by mortgage rate increases and remains the strongest segment of the residential real-estate market. However, industry analysts expect a boost in the number of first-time buyers this year, which would help balance the market and bring the average loan down. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

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