Mortgage rates surge — and refinance applications sink

Despite higher costs, applications for purchase loans increased 2% last week

(iStock/Illustration by Alexis Manrodt for The Real Deal)
(iStock/Illustration by Alexis Manrodt for The Real Deal)

Requests for loans to buy homes increased last week as mortgage rates hit their highest point since July.

An index tracking applications to purchase homes increased 2 percent, seasonally adjusted, from the prior week, according to the Mortgage Bankers Association.

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The uptick came despite rates rising to their highest point since July 2020 in the biggest one-week gain in almost a year, according to Joel Kan, head of industry forecasting at MBA.

The average rate for a 30-year, fixed-rate mortgage increased to 3.23 percent, up from 3.08 percent. The rate for jumbo loans rose 10 basis points to 3.33 percent.

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“Mortgage rates jumped last week on market expectations of stronger economic growth and higher inflation,” said Kan in a statement. He blamed the increase for the lack of growth in applications to refinance.

MBA’s index tracking refinancing requests increased 0.1 percent last week from the week prior. It marked the fourth week of overall decline in the share of refinancing requests, which still account for the majority of loans in MBA’s weekly indices.

The average size of purchase loans fell for the first time in six weeks, despite rising home prices. Kan attributed the decline to a jump in government mortgage applications, which are likely first-time homebuyers with smaller budgets.

Last week’s average purchase loan was $412,300, down from $418,000 the week before.

MBA’s survey covers 75 percent of the residential mortgage market and has been conducted weekly since 1990.