Mortgage Rates Increase to an 8-month High, Reducing Refinance Demand

Mortgage rates

Mortgage rates continued rising yet again last week reaching the highest level in the last eight months, as per the Mortgage Bankers Association (MBA).

That caused mixed demand for mortgages in the last week, leading to no change from the week earlier.

The mean contract rate for 30-year fixed-rate mortgages rose to 3.30% from earlier 3.23%. One year ago, that rate was lower by 30 basis points.

Because of the increase in interest rate, refinance demand decreased 2% week to week. Volume was 26% lower compared to the same week one year ago.

The refinance share of mortgage-related activity declined to 62.2% from 63.3% in the earlier week.

“The increase in rates triggered the fifth straight decrease in refinance activity to the slowest weekly pace since January 2020. Higher rates continue to reduce borrowers’ incentive to refinance,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Kan added, “Both new and existing-home sales last month were at their strongest sales pace since early 2021, but first-time homebuyers are accounting for a declining share of activity.”

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