Mortgage demand in U.S. rises slightly, but way down over past 12 months | The Daily Drum
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Mortgage demand in U.S. rises slightly, but way down over past 12 months

Posted on June 21, 2022

National News

Analysts say that the prospect of higher interest rates is driving a slight increase in mortgage applications week-to-week. But compared to a year ago, those applications are way down. File Photo by Alexis C. Glenn/UPI

As the Federal Reserve is expected to hike interest rates on Wednesday -- possibly by as much as three-quarters of a point -- mortgage demand in the United States is up, according to an industry report.

The Mortgage Bankers Association said in its weekly report that overall applications are up about 6.6% for the week -- but are way down compared to this same time last year.

Total mortgage applications, the MBA said, are down 53% over the past 12 months.

“Mortgage rates increased for all loan types, with the 30-year fixed rate last week jumping 25 basis points to 5.65% -- the highest level since 2008,” MBA Associate Vice President of Forecasting Joel Kan said in a statement.

“Mortgage rates followed Treasury yields up in response to higher-than-expected inflation and anticipation that the Federal Reserve will need to raise rates at a faster pace.”

The Federal Reserve will conclude its two-day policy meeting on Wednesday afternoon. Most analysts think the Fed will order a three-quarter-point rate increase, which would be the largest since 1994.

“Despite the increase in rates, application activity rebounded following the Memorial Day holiday week but remained 0.29% below pre-holiday levels,” Kan added. “With mortgage rates well above 5%, refinance activity continues to run more than 70% lower than last year.”

Analysts say that the prospect of higher interest rates is driving the slight increase in mortgage applications. Refinancing applications are up 4% for the week, the MBA said, but down 76% from where they were a year ago.

Adjustable-rate mortgages, which are often popular during times of higher interest rates, are down and account for only 8% of all mortgage applications, the MBA report noted.

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