Current mortgage interest rates have gone up for the third consecutive week, reaching their highest point since November. Moreover, there was a 2.7% decrease in mortgage applications in the US compared to the previous week. The Mortgage Bankers Association has given this report on the mortgage demand in the US.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 7.24% from 7.13%. Points also increased to 0.66 from 0.65 for loans with a 20% down payment, including the origination fee.
The Status of the Mortgage Demand in the US
Applications to refinance home loans, which are greatly affected by weekly interest rate changes, have decreased by 6% for the week. However, this number remained 3% higher compared to the same week last year. Meanwhile, the mortgage demand in the US has decreased by 1% for the week and was down by 15% compared to the same week last year.
Rising home prices and increasing interest rates are putting pressure on potential buyers, reducing their purchasing power. Joel Kan, MBA’s deputy chief economist, said that purchase applications decreased because homebuyers are postponing their purchase decisions. This decision is due to affordability challenges and limited supply impacting mortgage demand in the US.
In response to decreased affordability, the share of applications for adjustable-rate mortgages (ARMs) increased to 7.6% last week. ARMs typically offer lower initial interest rates and can have fixed rates for up to 10 years, but they are considered riskier options.
Current Mortgage Interest Rates
Current Mortgage interest rates have decreased slightly, but there has not been significant economic data affecting them. However, this could change next week with the release of the monthly employment report.
As of April 25, 2024, the average current mortgage interest rate for a 30-year fixed mortgage is 7.30%, up 8 basis points from last week. If you are considering refinancing, the average rate for a 30-year refinance mortgage is 7.32%, up 13 basis points in the past week.
Additionally, the average current mortgage interest rate for a 15-year refinance mortgage is 6.70%, up by 1 basis point from last week. While rates have increased recently, people expect them to gradually decrease throughout 2024.
The current mortgage interest rates have increased every week, as reported in Bankrate’s weekly survey of major lenders. The average rate for a 30-year fixed mortgage reached 7.33%, while for a 15-year fixed mortgage, it hit 6.66%. The March inflation report reduces the possibility of a reduction in the current mortgage interest rates.
Greg McBride, Bankrate’s chief financial analyst, said that the inflation figures were concerning. They led to increases in bond yields and mortgage rates, influencing mortgage demand in the US.
The Federal Reserve aims to stabilize inflation at around 2%. In its March meeting, the Fed opted to maintain current interest rates. While the Fed doesn’t control mortgage rates directly, its monetary decisions impact them indirectly. Fixed mortgage rates correlate with the 10-year Treasury yield, while the Fed’s actions influence adjustable-rate loans.
Bob Broeksmit, president and CEO of the Mortgage Bankers Association, suggests that recent economic indicators, indicating a strong economy and job market, will likely sustain elevated mortgage rates soon.
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