President Joe Biden’s White House is impressively good at being the best of the worst and breaking record after record. The ‘American Dream’ of buying a piece of property with a home is quickly dwindling away. “The pain in the mortgage market is only getting worse as higher interest rates and inflation hammer American consumers,” writes CNBC.
According to the Mortgage Bankers Association’s seasonally adjusted index, demand fell more than 6% last week compared to just the previous week alone. The result is the lowest level since 2000.
Applications for a mortgage to purchase a home dropped 7% for the week and were 19% lower than the same week in 2021. Buyers have been contending with high prices all year, but with rates almost double what they were in January, they’ve lost considerable purchasing power.
“Purchase activity declined for both conventional and government loans as the weakening economic outlook, high inflation and persistent affordability challenges are impacting buyer demand,” said Joel Kan, an economist for the MBA.
While mortgage interest rates haven’t moved much this week, writes CNBC, “that could change very soon due to increasing bond market volatility.” Additionally, “the Federal Reserve is expected to hike ratees by another 75 basis points next week, and other central banks are taking similar action against inflation.”
As for specific numbers, “the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.82% from 5.74%, with points increasing to 0.65 from 0.59 (including the origination fee) for loans with a 20% down payment. That rate was 3.11% the same week one year ago” reports CNBC.
“Demand for refinances, which are highly rated sensitive, fell 4% for the week and were 80% lower than the same week last year. Those applications are also at a 22-year low, but the drop in demand from homebuyers caused the refinance share of mortgage activity to increase to 31.4% of total applications from 30.8% the previous week.”
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