Interest rates are rising and mortgage demand fell to a 25-year low last week, continuing the decline for four straight months.
According to the Mortgage Bankers Association, mortgage demand shrank 4% last week compared to the previous week and fell 38% compared to the same week a year ago.
MBA reported that the average 30-year mortgage rate rose to 6.94% from 6.81%, the highest level since 2002. Refinance requests have also fallen sharply after borrowers took advantage of low-interest loans during the pandemic. The number of refinance requests fell 86% last week from the same week a year ago.
The Federal Reserve has hiked interest rates five times this year and a sixth hike is expected next month as the central bank tries to dampen inflation, which is at a 40-year high.
“The speed and level to which interest rates have risen this year has sharply reduced refinancing activity and exacerbated existing affordability challenges in the buying market,” MBA deputy chief economist Joel Kan said of downtrends coinciding with interest rate rises. “
Falling demand, rising interest rates and supply concerns contributed to an 8.1% drop in housing starts last month, according to the US Department of Housing and Urban Development.
Home builder sentiment fell for the 10th straight month, the National Association of Home Builders reported.
“This will be the first year since 2011 that there has been a decline in single-family homes,” said NAHB chief economist Robert Dietz. “And amid expectations of continued interest rate hikes from Federal Reserve action, single-family housing is projected to decline further in 2023 as the housing contraction continues.”
https://www.ibtimes.com.au/us-economy-soaring-interest-rates-spell-trouble-mortgages-1839707?utm_source=Public&utm_medium=Feed&utm_campaign=Distribution Rising interest rates mean problems for mortgages