Rates have been rising on a combination of concerns among investors. First, uncertainty over what the Federal Reserve will do with interest rates, given a still strong economy; second, the battle over raising the debt ceiling and the possibility of a U.S. default.
Both of those already had rates climbing last week with mortgage demand pulling back. Total mortgage application volume dropped 4.6% last week, compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
Last week, the weekly average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.69% for loans with a 20% down payment, according to the MBA. That rate was 5.46% the same week one year ago.
Mortgage applications to purchase a home dropped 4% for the week and were 30% lower than the same week a year ago.
Applications to refinance a home loan decreased 5% from the previous week and were 44% lower than the same week one year ago. That is the lowest level in two months.
Not only are there very few borrowers who could benefit from a refinance, given that rates were so much lower a year ago, but banks have been tightening lending due to recent bank failures.
(Source:CNBC)
