Mortgage rates hit 16-year high; applications fall
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Mortgage rates hit 16-year high and applications fall
, author of Illustration: Trent Joaquin/Axios Mortgage rates are continuing their upward climb, reaching levels not seen since 2006, while mortgage applications for house purchases were down 37% last week compared with a year ago. Why it matters: Rising interest rates and bond yields are driving up the cost of borrowing, putting home buying out of reach for more Americans, and potentially dampening prices. State of play: The average 30-year fixed rate mortgage , its highest point in 16 years, according to the Mortgage Bankers Association.At the same time, mortgage applications for new buyers plunged 13% from a week earlier, though the hurricane negatively impacted activity in Florida.Adjustable-rate mortgages increased to 11.8% of total applications last week. The big picture: Rates have more than doubled over the last 12 months.Unsurprisingly, refinancing activity is rapidly slowing, accounting for the bulk of the decline in total mortgage applications."The surge in mortgage rates has cut refinancing activity by 77% since the start of the year to a double-decade low," Capital Economics property economist Sam Hall Wednesday. Threat level: For new buyers in September, mortgage payments represented more than 26% of their income, up from 17% in September 2021, according to Capital Economics estimates.It "seems unlikely that mortgage applications will rebound in the coming months," Hall wrote. "If anything, we think there is room for them to edge down a little lower." Yes, but: Just because the housing market is slowing down doesn't mean we need to brace for a total free fall, a la 2008.Since housing inventory is still low, "we do not anticipate a housing market, or associated credit market, crash," Wells Fargo Investment Institute investment strategy analyst Michelle Wan wrote Monday in a research note.