Mortgage Rates Hover High: This week, mortgage rates climbed past the 7% threshold, putting off price-sensitive buyers.
According to Freddie Mac, the 30-year fixed rate mortgage rate rose to 7.17 percent on Thursday from 7.1% the previous week.
As a result of a government report showing inflation remained higher than expected, rates surged past 7% last week.
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The daily rate on the popular 30-year fixed loan was 7.52% on Thursday, the highest reading since November 2023, according to Mortgage News Daily, a separate measure.
First-time and repeat buyers were forced to stay away from the spring market due to an increase in rates.
According to Jiayu Xu, Realtor.com economist, rates could stabilize depending on inflation.
As mortgage rates reached their highest level since late 2023, mortgage demand slowed last week.
According to MBA’s weekly survey, homebuyer applications fell 1% during the week ending April 19. Overall, applications are down 15% from last year.
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Purchasers turned to government-backed loans or adjustable-rate mortgages (ARMs), which offer slightly lower interest rates.
As buyers sought any measure of relief, the ARM share of applications increased nearly 8%, the MBA noted.
Additionally, the FHA share of applications increased by roughly 13% in the week ending April 19.
Mortgage applications fell 6% last week as homeowners lost hope of finding a lower rate as mortgage rates rose.
There is no doubt that mortgage rates play a part in the lull in demand, but the limited supply of homes on the market also plays a role.
While home prices aren’t dropping, there is still more demand than supply.
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