Connect with us

Economy

American Home Buyers Rushing To Close Deals Before Mortgage Rates Go Higher

Published

on

Close up of couple signing documents | American Home Buyers Rushing To Close Deals Before Mortgage Rates Go Higher | featured

American home buyers are rushing to get their deals done. Mortgage rates are going up and many want to close their purchases before higher rates kick in. 

RELATED: Is the Red Hot Housing Market Cooling Down?

Mortgage Rates Are Going Higher As Home Buyers Rush To Complete Deals

Happy couple is taking keys from their new house from broker and smiling | Home Buyers

As more home buyers rush to complete their deals, mortgage rates continue to climb higher

The average 30-year fixed-rate mortgage interest rate went up from 3.52% to 3.64%. This covers loans with balances below $647,201. Meanwhile, points remain unchanged at 0.45 for loans with a 20% down payment.

This includes the origination fee.  Compared to the same period last year, this new rate is 72 basis points higher. This also jumped more than 30 basis points within the last two weeks. 

The increasing rates led to a disruption in mortgage demand. While refinancing continues to fall, home buyers appear to rush into closing a purchase.

Consequently, the total mortgage application volume rose 2.3% versus last week. This is according to the Mortgage Bankers Association’s seasonally adjusted index.

Applications For Refinancing Dried Up

Conversely, refinancing applications fell by 3% for the week and were almost 50% lower compared to last year. This means that the refinance share of mortgage activity decreased from 64.1% last week to 60.3%.

Joel Kan, MBA’s AVP of economic and industry forecasting, said the higher rates aren’t suitable for refinancing. “Mortgage rates hit their highest levels since March 2020,” he said. “It led to the slowest pace of refinance activity in over two years. FHA and VA refinance declines drove most of the refinance slowdown,” Kan added. 

Meanwhile, mortgage applications from home buyers increased by 8% for the week. However, these numbers are still 13% lower compared to the frenzied activity last year.

Analysts also noted that much of the buying activity centered on higher-priced houses. This is likely due to the fact that most of the cheaper houses are already off the market.

In fact, the average loan size for a purchase application during the period set a record at $418,500. Kan surmised that the slower growth in government purchase activity helped with the larger loan balance.

This suggests that “prospective first-time buyers are struggling to find homes to buy in their price range,” Kan said. 

Housing Continues To Stay In Demand

Demand for housing continues to be strong, mainly due to the fact that supply did not increase during December. Normally, the last month of the year brings a surplus number of available units.

Analysts think that some home buyers are jumping the gun before rates increase further. Instead of waiting for the spring market, many home buyers decided to do so now. 

Paul Legere, a buyer’s agent with The Joel Nelson Group, described the buying frenzy as unprecedented. “Some lenders I work with say they have had more first-time homebuyer applications in the last couple of weeks than they’ve seen in 20 years,” he said. 

Watch the Yahoo Finance video feature on Mortgage rates: What a Fed rate hike would mean for homeowners:

What do you think of the US housing market right now?

Please Select One:

View Results

Loading ... Loading ...

Did you purchase a house during the pandemic? Did you manage to lock down low rates? Also, what do you think of the housing market right now compared to last year?

Tell us what you think. Share your thoughts in the comments section below.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © 2023 The Capitalist. his copyrighted material may not be republished without express permission. The information presented here is for general educational purposes only. MATERIAL CONNECTION DISCLOSURE: You should assume that this website has an affiliate relationship and/or another material connection to the persons or businesses mentioned in or linked to from this page and may receive commissions from purchases you make on subsequent web sites. You should not rely solely on information contained in this email to evaluate the product or service being endorsed. Always exercise due diligence before purchasing any product or service. This website contains advertisements.

Is THE newsletter for…

INVESTORS TRADERS OWNERS

Stay up-to-date with the latest kick-ass interviews, podcasts, and more as we cover a wide range of topics, in the world of finance and technology. Don't miss out on our exclusive content featuring expert opinions and market insights delivered to your inbox 100% FREE!

SUBSCRIBE TODAY AND GET A FREE GIFT

Get ready to stay up-to-date with the latest business and market news from around the world!

The Capitalist is here to provide you with insightful data, analysis, and even videos to keep you informed.