In the week following the Federal Open Market Committee‘s meeting, mortgage applications sunk.
Based on the FOMC’s most recent projections, rates are expected to be higher for longer, which has driven Treasury yields to new heights.
Overall applications declined. And the purchase market saw applications down 2% over the prior week and 27% behind last year’s pace. It is still facing limited for-sale inventory and struggling with affordability issues. Meanwhile, refinance activity was down 1% from last week and 21% from last year. Refinance activity accounted for approximately one-third of applications (31.9%), as many homeowners have little incentive to refinance.
“Mortgage rates moved to their highest levels in over 20 years as Treasury yields increased late last week. The 30-year fixed mortgage rate increased to 7.41%, the highest rate since December 2000, and the 30-year fixed jumbo mortgage rate increased to 7.34%, the highest rate in the history of the jumbo rate series dating back to 2011,” said Joel Kan, MBA’s vice president and deputy chief economist.
He also added that applications declined overall because “both prospective homebuyers and homeowners continue to feel the impact of these elevated rates.”
The adjustable-rate mortgage (ARM) share of activity increased to 7.5% of total applications from 7.2% last week.
The 30-year fixed mortgage rate increased to 7.41% last week, according to Kan. At HousingWire’s Mortgage Rates Center, Optimal Blue showed the 30-year fixed-rate mortgage at 7.38% on Tuesday. At Mortgage News Daily, 30-year fixed-rate mortgage rates were at 7.50% on Tuesday.
The Federal Housing Administration loans’ share decreased to 14.1% from 14.2% last week. The U.S. Department of Veteran Affairs loans’ share decreased to 10.9% from 11% the week prior. Lastly, the U.S. Department of Agriculture loans’ share increased to 0.5% from 0.4% last week.
The average contract interest rate for 5/1 ARMs picked up to 6.47% from 6.42% a week prior.