Early this year, we have seen a spike in interest rates. With the rise of interest rates, there has been a drastic drop in refinancing from just a year ago and is at its slowest rate in 2 years. The 30 year fixed rate mortgage has increased 30 basis points over the past 2 weeks alone. Despite the interest rate increase, purchase applications have increased by 8%. The average loan size of an application is at its highest rate ever, driven by the inflated housing market and lack of housing inventory on the market.
High Levels Hit
“Mortgage rates hit their highest levels since March 2020, leading to the slowest pace of refinance activity in over two years. The 30-year fixed rate reached 3.64 percent and has increased more than 30 basis points over the past two weeks. FHA and VA refinance declines drove most of the refinance slowdown,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
The Federal Housing Administration (FHA) share of total applications decreased significantly across the board. The FHA applications decreased from 9.9 percent to 9.3 percent and the VA share declined to from 11.4 percent to 10 percent
During the first week of January 2022, the refinance index fell 3%, making it 49% lower than this time last year.
Overall, the inflation and lack of inventory we are seeing in the housing market has brought us to the highest rates for the average loan size.
Take your next step towards a home loan while activity is still strong, contact us today!