Buyers Retreat as Mortgage Rates Creep Over 7% Threshold Again
Mortgage rates rose above 7% again this week, and experts say purchase applications are likely to slow as a result
May 24, 2023
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The average rate on a 30-year, fixed mortgage surpassed 7% on Tuesday, sending mortgage applications to purchase a home down 4% for the week and 30% lower than the same week one year ago, CNBC reports. Rates are rising due to uncertainty about the Federal Reserve’s plan to tame inflation in a strong economy, as well as an ongoing battle over raising the debt ceiling and the possibility of a U.S. default.
Applications to refinance a home loan also dropped 5% from the previous week and were 44% lower than the same week one year ago, the lowest level in two months.
“Since rates have been so volatile and for-sale inventory still scarce, we have yet to see sustained growth in purchase applications,” said Joel Kan, vice president and deputy chief economist at MBA.
Even if the debt crisis is resolved before a default, rates don’t have a lot of reason to move significantly lower anytime soon.
