Mortgage demand shrinks as interest rates hit the highest level in nearly 23 years
The demand for mortgages has dropped, as interest rates have hit their highest level in nearly 23 years, according to new data from the Mortgage Bankers Association (MBA).
The MBA’s weekly loan application survey found that loan volume decreased 11.2 percent for the week ended May 31 compared to the week prior. Refinancing demand dropped 15 percent from the week before while purchase applications decreased 8 percent.
The average contract interest rate on a 30-year fixed mortgage jumped to 4.8 percent, its highest level since April 2011. This increase in rates could be due to the ongoing trade dispute between the U.S. and China, which has caused economic fears to grow and caused bond traders to shift money out of the housing market and into safe-haven investments.
The increase in mortgage rates could cause more borrowers to rethink their plans to purchase or refinance a home in the near future. This could result in a decrease in mortgage origination volume for the rest of 2019.