Mortgage Demand Slows As Rates Continue to Climb

October 15, 2021

Mortgage rates continued to climb last week, hitting their highest point in months. As rates continue to climb, existing owners see little reason to refinance, and new buyers, already facing historically high prices, see their purchasing power diminish.

The average interest rate for a 30-year fixed-rate mortgage jumped to 3.18% from 3.14% the previous week. Rates have climbed 15 basis points in the last month alone, and are at the highest level since June.

Applications to refinance fell 1% from the week prior and were 16% lower than in the same week last year. The portion of refinancing mortgage applications fell to 63.9% of total mortgage applications, down from 64.5% the week prior.

Applications for mortgages to purchase a home were up 2% for the week, but remain 10% lower than the same week in 2020.

With mortgages rates expected to continue their rise, there is concern that demand will continue to weaken in the coming months. Already facing high prices and low availability, the prospect of higher lending costs may cause buyers to pull back even further, making for a potentially weak winter in the housing market.

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