Mortgage rates are steadily rising, and as a result, applications to refinance a home loan dropped 49% year-over-year for the week of January 10, according to CNBC. On the contrary, mortgage applications from homebuyers rose 8% for the week, though they were 13% lower year-over-year.
A surge in first-time homebuyer applications is likely driven by high housing demand heading into a typically busy spring market. Some buyers may be rushing to get mortgages before another potential price hike during peak buying season, when strong demand will further reduce affordability.
Mortgage rates are rushing higher, and last week that caused a major divergence in mortgage demand. Refinancing continued to dry up, but homebuyers appear to be rushing into the market. As a result, total mortgage application volume rose 2.3% compared with 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 ($647,200 or less) increased to 3.64% from 3.52%, with points remaining unchanged at 0.45 (including the origination fee) for loans with a 20% down payment. That rate was 72 basis points higher than the same week one year ago and has increased more than 30 basis points in just the last two weeks.
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