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Mortgage market continues to shift as rates rise

February 12, 2018

The way mortgage rates are rising these days is likely having a significant impact on consumer habits and shopping preferences when it comes to buying a home. This issue is likewise going to dramatically reshape the refinance market in the months ahead. Indeed, many of those signs are already starting to show up in the mortgage market as a whole.

"There was a 0.7% increase in mortgage applications."

In the week ending Feb. 2 - the latest seven-day period for which complete data was available - there was a seasonally adjusted 0.7 percent increase in mortgage applications filed nationwide, according to the Weekly Mortgage Applications Survey from the Mortgage Bankers Association. That slight increase came in the form of a 1 percent increase in refinance activity - likely driven by consumers looking to get a good deal on such a loan before rates rise further - from the previous week, and no change in purchase activity.

However, the unadjusted number of purchase applications filed nationwide was still up 8 percent on an annual basis, the report said. But even with the increase in applications, refinances still only comprised 46.4 percent of the market during the week, marking the lowest level seen since last July.

Rates keep rising
Meanwhile, in the week ending Feb. 8, rates for 30-year fixed-rate mortgages averaged 4.32 percent, up sharply from the previous week's 4.22 percent, according to the latest Primary Mortgage Market Survey from Freddie Mac. That number was also up significantly from the 4.17 percent seen in the same week last year.

Meanwhile, rates for 15-year FRMs also spiked, rising to 3.77 percent from 3.68 percent a week earlier, the report said. They were up even more precipitously on an annual basis, however, having risen from 3.39 percent.

"Following a turbulent Monday, financial markets settled down with the 10-year Treasury yield resuming its upward march," said Len Kiefer, deputy chief economist at Freddie Mac."Mortgage rates have followed. The 30-year fixed mortgage rate is up 33 basis points since the start of the year. Will higher rates break housing market momentum? It's too early to tell for sure, but initial readings indicate housing markets are sustaining their momentum so far."

Who could face more difficulties?
Meanwhile, the people who are now running into the most difficulties buying a home are those in Generation X, according to a new survey from the National Association of Realtors. Today, 47 percent of those in Gen X say they have trouble saving up for a down payment, versus just 23 percent of millennials.

With affordability declining, millennials and Gen Xers alike are finding it more difficult to buy, but because they're several years older, the latter group is more likely to have kids and other debts that make it more difficult for them to make a home purchase, the report said.

Certainly, with both prices and rates likely to keep rising through the end of the year - and potentially beyond - it's vital for people to get into the market as soon as possible to lock in the best deal available.

 

 

 

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