The numbers: Home-shoppers hit the brakes on purchasing homes as mortgage rates rose in the latest week.
Demand for mortgages fell 8.8% in the latest week as rates rose for the first time in more than a month.
Demand fell for both purchases and refinancing. That pushed the market composite index — a measure of mortgage application volume — down, the Mortgage Bankers Association (MBA) said Wednesday.
The market index fell 8.8%, to 209.2, for the week ending April 14 from a week earlier. A year ago, the index stood at 374.
Key details: Refinancing, already in the doldrums, fell further. The refinance index fell 5.8% and is down 56% year to date.
Rate-sensitive would-be buyers pulled back sharply. The purchase index — which measures mortgage applications for the purchase of a home — fell 10% from the previous week.
Rates rose across the board.
The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 6.43% for the week ending April 14. That’s up from 6.3% the week before, the MBA said.
For homes sold for over $726,200, the average rate for the 30-year was 6.28%, up from 6.26% the previous week.
The 15-year rose to 5.89%, from the previous week’s 5.78%.
The rate for adjustable-rate mortgages rose to 5.56% from 5.51% previously.
The big picture: The housing market will likely feel the effects of rising mortgage rates strongly, as buyers — already frustrated with a shortage of for-sale listings –pull back on purchasing homes.
The MBA’s data indicated that first-time buyers in particular were holding back due to the rise in rates.
Many prospective sellers are delaying selling their homes because they’re unwilling to give up ultra-low mortgage rates they secured during the pandemic.
What the MBA said: “Affordability challenges persist and there is limited for-sale inventory in many markets across the country, so buyers remain selective on when they act,” Joel Kan, vice president and chief economist at the MBA, said.
Market reaction: The yield on the 10-year Treasury note TMUBMUSD10Y, 3.621% was above 3.6% in early morning trading Wednesday.