Volatile mortgage rates are holding back both homeowners looking to refinance and prospective buyers, new data from the Mortgage Bankers Association shows.
The average rate on the 30-year fixed conforming loan reached its highest level in two years last week, causing refinancing applications to drop by 16 percent and purchasing applications by 3 percent, according to the figures, cited by CNBC.
Meanwhile, real estate website Zillow showed mortgage rates moving off their highs but not by much.
Compared to early May, mortgage rates have risen about a full percentage point. That’s a 15 percent jump in monthly payments for the average homebuyer, CNBC said.
“Applications for new home purchases have continued to move sideways over the last month, but that may be people are rushing to buy or lock in mortgage rates before rates move even higher,” Michelle Girard of RBS Securities told CNBC. “It may be that there is going to a bit of a lag effect. I still think rates are historically low, and we are in an improving economy, although a gradual one, the recovery can continue, maybe the pace will moderate — but I do not think the back up in mortgage rates is going to derail the housing recovery.” [CNBC] – Mark Maurer