The numbers: Mortgage rates didn’t move much this week, but home-buying demand fell as aspiring homeowners contend with high borrowing costs.
The 30-year was averaging at 6.87% in mid-July, which pushed overall mortgage applications down 1.8%.
Demand for both purchases and refinancing fell. That overall pushed the market composite index — a measure of mortgage application volume — down, the Mortgage Bankers Association (MBA) said on Wednesday.
The market index fell 1.8% to 206.9 for the week ending July 21 from a week earlier. A year ago, the index stood at 276.
Key details: High mortgage rates discouraged home buyers. The purchase index — which measures mortgage applications for the purchase of a home — fell 2.5% from last week.
The purchase index was also pulled down by a sharp drop in Federal Housing Administration purchase applications, which fell 10.2%, the MBA said. That drop pushed the index down to its lowest level in a month.
Homeowners didn’t see the current environment as a good time to refinance. The refinance index fell 0.4%.
The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 6.87% for the week ending July 21. That’s unchanged from the week before, the MBA said.
The rate for jumbo loans, or the 30-year mortgage for homes sold for over $726,200, was 6.9%, down from 6.89% the previous week.
The 15-year rose to 6.37%, from last week’s 6.36%.
The rate for adjustable-rate mortgages fell to 6.01% from last week’s 6.27%.
The big picture: Rates remain elevated ahead of the U.S. Federal Reserve meeting today, where the central bank is widely expected to raise its benchmark interest rate to the highest level in two decades. But the market is also looking for signs of whether the Fed is planning to slow rate increases, given that the U.S. economy is showing signs of cooling off.
While the Fed’s rate hike doesn’t directly impact mortgage rates, expectations of tighter lending conditions reflect on the 30-year. The 30-year was averaging at 7.04% as of Wednesday morning, ahead of the Fed decision, according to a separate survey tracked by Mortgage News Daily.
Market reaction: The yield on the 10-year Treasury note
TMUBMUSD10Y,
was above 3.8% in early morning trading Wednesday.
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