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REAL E STATE

Mortgage refinance demand plunges

60%, as rates hit their highest level
since 2018
Diana Olick
@ I N / D I A N AO L I C K
@ D I A N AO L I C KC N B C
@ D I A N AO L I C K

TV

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KEY The average contract interest rate for 30-year fixed-rate mortgages with conforming
POINTS loan balances ($647,200 or less) increased to 4.80% from 4.50%. UP NEXT | ET Listen

Refinance applications fell 15% for the week and were down 60% from a year ago.

Homebuyer mortgage demand rose 1% for the week but was down 10% from a year
ago.

VIDEO 01:54

Mortgage refinance demand falls 60% year-over-year

amid rising rates

Mortgage rates took another jump higher last week, taking their toll on current
borrowers who might have wanted to refinance. Demand from homebuyers,
however, appears to be hanging in for now.

Total mortgage application volume decreased 6.8% last week compared with
the previous week, according to the Mortgage Bankers Association's seasonally
adjusted index. This, as the average contract interest rate for 30-year fixed-rate
mortgages with conforming loan balances ($647,200 or less) increased to
4.80% from 4.50%, with points decreasing to 0.56 from 0.59 (including the
origination fee) for loans with a 20% down payment.

"Mortgage rates jumped to their highest level in more than three years last
week, as investors continue to price in the impact of a more restrictive
monetary policy from the Federal Reserve," said Michael Fratantoni, MBA's
chief economist.

Driving the downturn in overall mortgage demand was a 15% weekly drop in
refinance applications. They are now down a whopping 60% from a year ago.
The refinance share of mortgage activity decreased to 40.6% of total
applications from 44.8% the previous week.

Mortgage applications to purchase a home increased 1% for the week but were
10% lower than the same week one year ago. Homebuyers today continue to
face sky-high prices and record low supply, in addition to rising mortgage rates.
Affordability is weakening dramatically, but some real estate agents say the
competition is not letting up.

"I will say I have had more cash buyers this this year than I've ever had, and
they're borrowing from parents. They're just finding that cash because they
know that it's more competitive with cash offers," said Kelly Theriot
McMahon, a real estate agent with Compass in Dallas.

At an open house held last Sunday, she said buyers were steeling themselves
for a bidding war.

"You have to look at it knowing you're probably going to have to offer like
$40,000 over asking price," said Lauren Poey, a potential buyer touring the
home.

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