OAN’s James Meyers
10:25 AM – Wednesday, May 29, 2024
A key measure of home-buyer applications fell to a three-month low as mortgage rates started to rise again.
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The Mortgage Bankers Association (MBA) index of mortgage applications slid 5.7% for the week ending on May 24th, according to new data published on Wednesday.
The average contract interest rate for 30-year fixed mortgages with conforming loan balances ($766,550 or less) increased to 7.05% from 7.01%, with points rising to 0.63 from 0.60 (including the origination fee) for loans with a 20% down payment.
This marks the highest level for interest rates in four weeks.
“Mortgage rates increased for the first time in four weeks, with the 30-year fixed rate up to 7.05% and all other loan types also seeing increases,” said Joel Kan, MBA’s vice president and deputy chief economist. “The uptick in rates led to a decline in mortgage applications heading into Memorial Day weekend.”
Additionally, housing demand decreased as rates continued to increase. Applications for a mortgage to purchase a home dropped 1% from the previous week. People applying to purchase homes is also down 10%, compared to the same time last year.
The demand for refinancing also fell last week, decreasing 14% from the previous week, according to the survey. Since this time last year, refinance applications are up 12%.
The housing market has begun to cool down as a result of the Federal Reserve’s move to increase interest rates to its highest level in 23 years.
Furthermore, experts are predicting that mortgage rates will continue to stay high for most of the year and will only begin to fall once the Federal Reserve begins slashing interest rates. However, even if rates are cut, they will most likely not return to the levels seen during the pandemic.
Economists are now predicting that the cuts could begin sometime in either September or November if inflation begins to cool down.
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