Mortgage rates continue to climb as more people apply for home loans

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On the mortgage front

Freddie Mac (OTCMKTS:FMCC) reported that the 30-year fixed rate mortgage averaged 6.29% as of September 22, up from last week when it averaged 6.02%.

The 5-year fixed rate mortgage averaged 5.44% compared to last week when it averaged 5.21%. And the 5-year Treasury-indexed hybrid variable-rate mortgage averaged 4.97%, up from last week when it averaged 4.93%.

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“The housing market continues to face headwinds as mortgage rates rise again this week, after the 10-year Treasury yield jumped to its highest level since 2011,” said Sam Khater, senior economist. head of Freddie Mac.

“Impacted by higher rates, home prices are falling and home sales have declined. However, the number of homes for sale remains well below normal levels.

As mortgage rates continued to climb, mortgage applications jumped for the first time in six weeks. The Mortgage Bankers Association (MBA) reported that the market’s composite index rose 3.8% on a seasonally adjusted basis and was also 14% higher on an unadjusted basis.

The unadjusted rollover index was up 10% and the seasonally adjusted buy index was up 1% – the latter was also 11% higher on an unadjusted basis.

“As with rate fluctuations and other uncertainties around the housing market and the broader economy, mortgage applications rose for the first time in six weeks, but remained well below l last year, with purchase requests down 30% and refinancing activity down 83%,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting.

The weekly gain in applications, despite higher rates, underscores the overall volatility at the moment as well as the adjusted Labor Day results the week before.

On the frontline of buying a house

Total existing home sales in August fell 0.4% from July to a seasonally adjusted annual rate of 4.80 million in August, according to the National Association of Realtors (NAR). Year-over-year sales fell 19.9% ​​from the 5.99 million level in August 2021.

“The housing sector is the most sensitive and suffers the most immediate impacts from changes in Federal Reserve interest rate policy,” said NAR chief economist Lawrence Yun.

“Weak home sales reflect higher mortgage rates this year. Nonetheless, homeowners are doing well with sales of distressed properties almost non-existent and house prices still higher than a year ago.

Total housing inventory at the end of August was 1.28 million, down 1.5% from July and unchanged from a year earlier. The median existing home price for all housing types in August was $389,500, a 7.7% year-over-year peak.

August marked the 126th consecutive month of year-over-year increases, the longest streak on record, but it was also the second month in a row that the median selling price retracted after hitting a record high of $413,800 in June.

Separately, Zillow Inc (NASDAQ:ZG) reported that the value of a typical home fell 0.3% from July to August and now stands at $356,054 – the biggest drop ever. monthly since 2011 and follows a 0.1% drop in July.

Zillow also noted that inventories rose 1% from July to August, the lowest monthly increase since February.

“Substantial day-to-day and week-to-week rate movements mean that many potential buyers may qualify for a loan one week but not the next, or vice versa,” he said. Skylar Olsen, chief economist at Zillow.

“Even buyers able to afford a home at current rates could feel frozen, waiting for mortgage rates to fall dramatically again, as they did from late June to mid-July, when rates fell. by 50 basis points in just two weeks.”

In another data report, RE/MAX (NYSE:RMAX) reported that the near-list price ratio in August, as measured in its National Housing Report analysis of the 51 major metropolitan areas, was 99 %, which means the houses sold for 1% less than the asking price.

That’s down from July’s 101% and was attributed to August sales rising 5.3% from July, while the median selling price fell 2.4% to $410,000 after peaking at $426,000 three months earlier.

“Patient buyers were rewarded in August as prices fell from July. Sales increased as buyers ‘bought the dip’ – which was not the trend many people were expecting .

Activity depleted inventory slightly, although the number of homes for sale remains significantly higher than a year ago,” said Nick Bailey, President and CEO of RE/MAX. “The surge in activity at the end of the summer highlights the resilience of the housing market.

Despite rising interest rates and concerns about the economy, demand remains strong. We’ll see what happens from now on, but August’s sales surge was great news for the industry.”

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