Mortgage applications dropped 13.1% last week to the lowest level since December 2019, while applications to refinance fell 15% weekly and 56% year-over-year, CNBC reports. During the week ending February 18, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $647,200 or less increased from 4.05% to 4.06%, with points rising from 0.45 to 0.48 for loans with a 20% down payment.
The third consecutive week of declines for purchase applications comes as a result of higher mortgage rates combined with rising home prices and low inventory, but some economists predict that price growth will slow in the coming months as demand softens.
“We have previously suggested that the strength in the U.S. housing market is being driven in part by a change in locational preferences as households react to the COVID pandemic,” [Craig J. Lazzara] said. “More data will be required to understand whether this demand surge simply represents an acceleration of purchases that would have occurred over the next several years rather than a more permanent secular change. In the short term, meanwhile, we should soon begin to see the impact of increasing mortgage rates on home prices,” he said.
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