Some Buyers Fear the End of Low Mortgage Rates is Here

Both mortgage rates and applications to refinance a home loan increased slightly last week, reversing course of previous trends. Rates for 30-year fixed-rate mortgages reached their highest level in one month, says CNBC, going from 3.11% to 3.18% last week. Increases come after the Federal Reserve said rising interest rates could come in 2023. Refinance demand has consistently dropped, but the past few weeks’ interest rate actions could result in more homeowners applying for refinancing out of fear record low rates are at their end. 

Refinance demand had been falling sharply as rates rise but has improved in recent weeks. This may be because homeowners think rates are only going up, and it could be the last chance for the best deal. Rates set more than a dozen record lows last year, and refinance demand was huge. However, thousands of borrowers can still save now before rates move higher.

Mortgage applications to purchase a home increased 1% from the previous week and were 14% lower than a year ago. Buyers are hitting an affordability wall, as home prices keep rising quickly. A report on existing home sales in May showed the fourth straight month of declining home sales.

“Falling affordability is simply squeezing some first-time buyers out of the market.,” said Lawrence Yun, chief economist for the National Association of Realtors, which issued the report Tuesday.

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