Residential homes in Discovery Bay, California, USA, on Thursday, November 7, 2024. US mortgage rates rose to their highest level since July.
David Paul Morris | Bloomberg | Getty Images
Mortgage rates rose for the fourth week in a row last week. This caused an even greater drop in the already very weak demand for mortgages. Total mortgage applications fell 3.7% compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. An additional adjustment was made for the New Year holidays.
The average contract interest rate for 30-year fixed-rate mortgages with qualifying loan balances ($766,550 or less) rose to 6.99% from 6.97%, with a point decrease to 0.68 from 0.72 (including approval fee) for loans with 20% down payment.
Requests for home loan refinancing increased by 2% compared to the previous week, but were 6% lower than in the same week a year ago. Rates are now 18 basis points higher than they were a year ago. As for the weekly gain, the refinancing volume is currently so low that the percentages fluctuate more than usual.
Home mortgage applications fell 7% on the week and were 15% lower than the same week a year ago. The supply of homes for sale is now significantly higher than last January, but higher rates and higher home prices are clearly keeping buyers away.
“Applications for purchases fell for both conventional and government loans and fell to their slowest weekly pace since February 2024,” said Joel Kan, MBA vice president and deputy chief economist. “Refinance applications rose despite higher rates, but the increase was compared to recent lows and was driven entirely by an increase in VA refinances, which continue to show weekly swings.”
Mortgage rates have risen since the start of this week, according to a separate survey by Mortgage News Daily, which had the 30-year fixed average at 7.14% on Tuesday. Economic data was the driving factor.
“The inflation component of ISM Services was one of the worst offenders, but higher vacancies didn’t help. The jump in yields was momentary but fairly well contained,” noted Matthew Graham, chief operating officer at MND.
More economic data arrives on Wednesday with the release of minutes from the Federal Reserve meeting and on Friday with the all-important monthly employment report. They will either keep exchange rates on an upward trajectory or, perhaps, reverse the trend for the new year.
