Mortgage Rates Increase, Applications Decrease: Strategies to Secure a Low Rate Now
By Mortgage rates increased across the board last week, pushed higher by market expectations that inflation will persist and the Federal Reserve will maintain restrictive monetary policy for a longer time.[0] After five straight weeks of decreases, the 30-year fixed rate increased by 21 basis points to 6.39%.[1] According to Joel Kan, MBA’s Vice President and Deputy Chief Economist, “Mortgage applications decreased for the second time in three weeks because of these higher rates. Refinance borrowers, both rate/term and cash-out, remain on the sidelines as current rates provide little financial incentive to act.”
The refinance share of mortgage activity decreased to 32% of total applications, while the adjustable-rate mortgage share of activity rose to 6.9% of total applications.[2] Rates for 30-year fixed, 15-year fixed, 5/1 ARMs, and jumbo loans all rose last week.[3] The Refinance Index showed a 13% decrease from the week before, and was down 76% compared to the same week a year prior.[4] The Purchase Index decreased 6% from one week earlier and was 43% lower than the same week one year ago.[4]
Data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey showed that applications for mortgages decreased by 7.7 percent from Feb. 3 to Feb. 10. On Friday, the 30-year mortgage rate average increased by 18 basis points to reach 6.74%, the highest it has been since the 5th of January.[5]
For potential buyers looking to secure a mortgage, it may be beneficial to act sooner rather than later, as the Fed may raise rates higher in the future.[6] Improving your credit score, researching the down payment amount, and shopping around for the lowest rate are all suggested approaches to get a good mortgage rate.
Overall, mortgage rates remain high and the current market is a challenging one for home buyers and refinancers alike. With the right strategies, however, it is still possible to find a low mortgage rate and secure a home loan.
0. “Mortgage demand drops as interest rates bounce higher” CNBC, 15 Feb. 2023, https://www.cnbc.com/2023/02/15/mortgage-demand-drops-interest-rates-jump.html
1. “Mortgage Applications Fall For 2nd Time in 3 Weeks” National Mortgage Professional, 15 Feb. 2023, https://nationalmortgageprofessional.com/news/mortgage-applications-fall-2nd-time-3-weeks
2. “US mortgage applications decrease across the board” Mortgage Professional, 15 Feb. 2023, https://www.mpamag.com/us/mortgage-industry/market-updates/us-mortgage-applications-decrease-across-the-board/436423
3. “Mortgage and refinance rates today, February 13th, 2023 – Rates rise” Bankrate.com, 13 Feb. 2023, https://www.bankrate.com/mortgages/todays-rates/mortgage-rates-for-monday-february-13-2023
4. “Mortgage Applications Declined 7.7% in Week Ending February 10” Floor Focus, 15 Feb. 2023, https://www.floordaily.net/flooring-news/mortgage-applications-declined-77-in-week-ending-february-10
5. “Today's Mortgage Rates & Trends – February 13, 2023: Rates spike” Investopedia, 13 Feb. 2023, https://www.investopedia.com/today-s-mortgage-rates-and-trends-february-13-2023-rates-spike-7108876
6. “Mortgage Rate Roller Coaster: What's Going on in the Real Estate Industry?” RealtyBizNews, 15 Feb. 2023, https://realtybiznews.com/mortgage-rate-roller-coaster-whats-going-on-in-the-real-estate-industry/98775838/
