A sharp jump in mortgage rates last week soured demand from both current homeowners and potential homebuyers, causing mortgage applications to drop.
Russian invasion of UkraineThe average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 4.27% from 4.09%, with points rising to 0.54 from 0.44 for loans with a 20% down payment, according to the Mortgage Bankers Association.
"Mortgage rates continue to be volatile due to the significant uncertainty regarding Federal Reserve policy and the situation in Ukraine. Investors are weighing the impacts of rapidly increasing inflation in the U.S. and many other parts of the world against the potential for a slowdown in economic growth due to a renewed bout of supply-chain constraints," said Joel Kan, an MBA economist.
Applications to refinance a home loan, which are most sensitive to weekly rate moves, fell 3% for the week, seasonally adjusted, and were 49% lower than the same week one year ago, when rates were a full percentage point lower. The refinance share of mortgage activity decreased to 48.4% of total applications from 49.5% the previous week.
Home prices are so high that the average loan size in applications last week to buy a home was $453,200 – the second-highest amount in the MBA's survey.
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