Aug. 16 (UPI) — With the rate on a 30-year, fixed-rate mortgage topping 7%, the number of applications for a loan toward a home purchase dropped nearly 1% week-on-week, the Mortgage Bankers Association reported Wednesday.
The 30-year fixed mortgage rate increased for the third straight week, reaching 7.16%, matching October 2022’s rate and the highest rate since 2001,” said Joel Kan, the MBA’s vice president and deputy chief economist.
The MBA found mortgage applications declined by 0.8% week-on-week. Meanwhile, the number of applicants searching for an adjustable-rate mortgage increased to its highest level since April as borrowers look for better terms.
Recent economic data, Kan added, shows a mixed future, which may create challenges for the Federal Reserve in its fight against inflation.
The Fed raised its lending rate by 25 basis points last month, but suggested it would take a wait-and-see approach to future rate hikes based on economic momentum.
On Tuesday, the National Association of Home Builder said that market confidence for the construction of a new single-family home contracted in August, after seven consecutive months of optimism. The NAHB blamed the decline on elevated lending rates and “stubbornly” high levels for the shelter component of consumer inflation.
NAHB Chairman Alicia Huey added the higher construction costs, which come as a result of a lack of construction workers, and the lack of available lots were compounding the issue.
The shelter component of the Consumer Price Index, meanwhile, showed a 7.7% increase year-on-year to July, the second-largest increase after transportation services. The broader housing market is tight.
While some homeowners are looking for variable-rate mortgages for relief, others are staying put to capitalize on their lower lending rates, creating a supply-side issue for the housing market.
