Mortgage applications plummet as interest rates rise yet again

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Rapidly rising interest rates, 40-year high inflation and tight housing supply continue to depress mortgage applications, while mortgage rates for all types of loans have continued to rise , which makes buying a home even more expensive.

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Mortgage applications fell for the fourth consecutive week, down 1.3% from the previous week, according to data from the Mortgage Bankers Association (MBA) weekly mortgage applications survey. The data covers the week ending April 8, 2022, according to a press release.

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MBA Senior Vice President and Chief Economist Mike Fratantoni said in the statement that mortgage rates have climbed more than 1.5 percentage points so far in 2022. The Federal Reserve, responds to the labor market boom and inflation at its highest level in 40 years,” he said. “Rising mortgage rates will slow the housing market and further reduce demand for refinancing the rest of this year.”

Fratantoni added that rising home prices and tariffs – along with ongoing supply constraints – are now expected to lead to an annual decline in sales of existing homes. “However, MBA continues to expect purchases to reach a new record high in 2022,” he said, adding that while existing sales volume will be slightly lower than last year, the Continued growth in new home sales and rapidly rising home prices are expected to generate a weaker but solid 4% annual growth in origination volume.

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The MBA has also cut its origination outlook, now expecting total origination volume to reach $2.58 trillion this year, up from around $4 trillion in 2021. The previous forecast was 2. $61 trillion, CNBC reported.

In addition, the MBA said mortgage rates for all loan types continued to rise, with the 30-year fixed rate breaking the 5% mark to 5.13%, the highest since November 2018.

The average contractual interest rate for 30-year fixed rate mortgages with jumbo loan balances (balances greater than $647,200) increased from 4.51% to 4.68%.

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“As a result, refinancing activity declined at the slowest weekly rate since 2019,” Joel Kan, associate vice president of economic and industry forecasting at MBA, said in the statement. The unadjusted refinancing index was down 5% from the previous week and was 62% lower than the same week a year ago, the MBA said.

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About the Author

Yael Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She has also worked as a VP/Senior Content Writer for major New York-based financial firms, including New York Life and MSCI. Yael is now independent and most recently co-authored the book “Blockchain for Medical Research: Accelerating Trust in Healthcare”, with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in journalism from New York University and one in Russian studies from Toulouse-Jean Jaurès University, France.

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