Homebuyer demand for mortgages drops 10%, as higher interest rates price some people out – By Diana Olick (CNBC) / February 9, 2022
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 3.83% from 3.78%
- Mortgage applications to purchase a home dropped 10% last week compared with the previous week and were 12% lower year over year.
- Applications to refinance a home loan fell 7% for the week and were 52% lower than the same week one year ago.
Mortgage rates have been rising since the start of the year, but buyers at first seemed unfazed, some even rushing to get in before rates moved higher. Now buyers are pulling back.
Mortgage applications to purchase a home dropped 10% last week compared with the previous week, seasonally adjusted, and were 12% lower year over year, according to the Mortgage Bankers Association. The average loan size hit another record high at $446,000, indicating that most of the buying activity is on the higher end of the market, where there is comparatively more supply.
And supply is a key factor in mortgage demand. The total inventory of homes for sale was down 28% nationally in January from January of last year, according to Realtor.com. New listings were also down 9%, the second straight month of declines. That is likely playing into February as well, since sellers are not exactly rushing into the market.
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