The Federal Reserve's strategy of raising interest rates in an attempt to fight sky-high inflation is sending mortgage rates higher, hurting home buyers.
Higher interest rates have hit the home-buying market hard.mortgage applications
plunged 14.2%, according to the weekly mortgage application survey from the Mortgage Banker's Association. "The 30-year fixed rate hit 6.75% last week – the highest rate since 2006," said Joel Kan, MBA’s associate vice president of economic and industry forecasting. "The current rate has more than doubled over the past year and has increased 130 basis points in the past seven weeks alone."Demand has fallen in all sectors of the mortgage industry.
The Refinance Index decreased 18% from the previous week and was 86% lower than the same week one year ago. "The steep increase in rates continued to halt refinance activity and is also impacting purchase applications, which have fallen 37 percent behind last year’s pace," said Kan. "Additionally, the spreads between the conforming rate compared to jumbo loans widened again, and we saw the ARM share rise further to almost 12 percent of applications.
"Applications in Florida fell 31 percent, compared to 14 percent overall, on a non-seasonally adjusted basis." added Kan.
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