Mortgage rates have risen sharply again for most of the past week, leading to a sharp drop in mortgage demand, but that all changed over the weekend when the Covid-Omicron version was announced.

Last week, the 30-year average fixed-rate mortgage with a prorated loan balance ($ 548,250 or less) fell from 3.24% to 3.31%, with points ranging from 0.36 to 0.43 (including fixed costs) for decreasing loans Payments decreased by 20%. , according to the Mortgage Bankers Association. This is the highest rate since April this year. A year ago the rate was 39 basis points lower.

Rising interest rates caused seasonally adjusted mortgage loan refinancing applications to drop by 15% over the week. A further adjustment was made for the Thanksgiving holiday. The refinancing demand was 41% lower than in the same week last year. The mortgage refinancing rate fell to 59.4% of total claims from 63.1% the previous week.

Mortgage rates rose for the third consecutive week, reducing the incentive for many borrowers to refinance. Over the past three weeks, rates have increased by 15 basis points and refinancing activity has fallen by more than 18%, ”said Joel Kan, associate vice president of economic and industrial forecasts at MBA.

Mortgage applications for home purchases increased 5% during the week and decreased 8% year-on-year. Buyers have returned to the market unexpectedly as this is usually the start of the slower season of home construction. According to the National Association of Real Estate Agents, October home sales, as measured by signed contracts, increased to an unusually high level of 7.5% from September. Some economists suggest fears of a rise in loan rates will push more buyers into the market by spring.

The average purchase loan rose to $ 414,700, the highest since February 2021. This reflects not only rising house prices but also that most of the buying activity is at the high end of the market. , where more homes are for sale.

“While home prices are rising in double digits, buyers of new and more expensive homes are still at the forefront of the buying activity and the percentage of first-time buyers remains depressed,” said Kan.

Although rates have been rising for much of the past week, they quickly returned on Friday when news of the Omicron version hit. The average 30-year bond rate fell 15 basis points on Tuesday.

Interest rates began to drop following the option and then fell even further after Federal Reserve Chairman Jerome Powell testified before Congress on Tuesday.

Powell’s comments on inflation and bond-buying have turned the bond market in the opposite direction. Mortgage-backed bonds lost all of their daily gains and most lenders made changes to the higher rates at noon, ”

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