Last week, mortgage rates rose again, causing a large drop in mortgage demand, but the landscape changed later in the week as news of the COVID-19 variant Omicron came to light.
According to the Mortgage Bankers Association, the average rate on the 30-year mortgage with conforming loan balance ($548,250 or less) increased to 3.31% from 3.24% last week, with points rising to 0.43 from 0.36 for loans with a 20% down payment.
These are the highest rates we’ve seen since April of this year. For comparison, the rate was 39 basis points lower just one year ago.
The increase in rates caused a 15% drop in applications to refinance a home for the week, seasonally adjusted. An additional adjustment was made for the Thanksgiving holiday. Refinance demand was 41% lower than the same week one year ago. The refinance share of mortgage activity decreased to 59.4% of total applications from 63.1% the previous week.
Mortgage applications to purchase a home jumped 5% for the week and were 8% lower from a year ago. Note that buyers have been returning to the market unexpectedly, as this time of the year is typically the beginning of a slow season for housing. Pending home sales in October, which are measured by signed contracts, jumped an unusually high 7.5% compared with September, according to the National Association of Realtors. Some economists are suggesting that the fear of higher mortgage rates by this coming spring could be pushing more buyers into the market now.
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