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Adam Jeffrey | CNBC
A brief lull amid a rising interest rate storm has given weekly mortgage demand a modest boost over the past week, but this is unlikely to be the start of a new trend. Interest rates have already risen sharply this week.
Total mortgage applications increased 2.5% in the week ended April 29 compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. That was because mortgage rates took a very slight step back and the housing market entered its busiest historically in the spring.
The average contract rate for 30-year fixed-rate mortgages with matching loan balances ($647,200 or less) fell from 5.37% to 5.36%, with points falling from 0.67 (including the setup fee) to 0.63 for loans with a Payment fell by 20%. That rate was 218 basis points lower in the same week a year ago. Earlier this week, prices shot up significantly.
The few borrowers who would benefit from refinancing took their chance. Refinancing requests rose 0.2% on the week but were still 71% lower than a year ago. Nevertheless, the refinancing share of mortgage activity fell to 33.9% of all applications from 35.0% in the previous week. Refinancing accounted for a large portion of mortgage activity over the past year.
Mortgage applications to buy a home rose 4% on the week but were still down 11% year-on-year. Homebuyers are now turning more to adjustable rate mortgages, which offer a much lower interest rate and can have a fixed rate for up to 10 years. ARM’s share of activity remained flat at 9.3% of total applications, but that’s more than double what it was a year ago.
“The buying market continues to be challenged by low housing inventories and rapid house price gains, as well as affordability impacted by higher mortgage rates, forcing potential buyers to factor in higher monthly payments,” said Joel Kan, an MBA economist.
Interest rates rose again this week, which will make it harder for buyers to afford the few options on the market. Affordability is near record lows and the supply of homes for sale has not increased enough to ease competition.
https://www.cnbc.com/2022/05/04/weekly-mortgage-demand-rose-for-the-first-time-since-early-march-last-week-but-it-wont-last.html Weekly mortgage demand rose for the first time since early March last week, but that won’t last