A spell isn’t going to wash away rising mortgage rates, which are at their highest point since “Harry Potter” premiered in theaters — the first one.
The average 30-year fixed mortgage rate rose for the 10th straight week to hit 7.16 percent, according to the Mortgage Bankers Association. The figure for the week ending on Oct. 21 was up from the 6.94 percent reported the previous week, and marked the highest since 2001.
Rising rates continue to choke demand. Mortgage applications decreased 1.7 percent from the previous week on a seasonally adjusted basis. Application activity was at its slowest pace since 1997.
Purchase applications declined 2 percent from the previous week, hitting its slowest pace since 2015, while refinancings marginally increased, but came in down 86 percent year over year.
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Activity in the mortgage market may not improve in the next couple of years, either, according to MBA deputy chief economist Joel Kan.
“[The] forecast expects both economic and housing market weakness in 2023 to drive a 3 percent decline in purchase originations, while refinance volume is anticipated to decline by 24 percent,” Kan said in a statement.
The VA and USDA share of total applications remained unchanged from the previous week. The FHA share, however, increased slightly from the previous week, buoyed by rates lower than those of conventional loans.
The average contract interest rate for a 30-year fixed-rate mortgage with a jumbo loan balance — greater than $647,200 — increased to 6.53 percent. The average contract interest rate for a 15-year fixed-rate mortgage increased to 6.39 percent.
Forecasts for mortgage rates don’t promise relief for homebuyers in the near future. National Association of Realtors chief economist Lawrence Yun earlier this month predicted mortgage rates could go up to 8.5 percent if interest rates pass a 7 percent threshold. Interest rate hikes don’t always lead to higher mortgage rates, but they generally follow the same trend.