As mortgage rates begin to rise, many Americans are jumping into the market before they have a chance to go even higher — and they’re willing to pay more for homes than they ever have before .
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Mortgages to buy a home climbed 8% week-over-week in the seven days ending Jan. 14, according to the Mortgage Bankers Association’s (MBA) latest weekly mortgage application survey. , published on Wednesday. Overall mortgage applications rose 2.3% on a seasonally adjusted basis.
The surge in activity came as mortgage rates hit their highest level in nearly two years amid moves by the Federal Reserve to slow its asset purchases in a bid to raise interest rates. interest in 2022.
The 30-year fixed rate hit 3.64% during the week and has risen more than 30 basis points over the past two weeks, according to Joel Kan, associate vice president of economic and industrial forecasting at the MBA.
Despite the price hike — or perhaps because of it — purchase requests soared 8% over the week, with classic purchase requests accounting for much of the activity. The average loan size for a purchase request set a record high of $418,500.
Many potential buyers might want to enter the market now before rates get too high. But higher asking prices are still holding many people back, primarily first-time home buyers.
“The continued increase in the size of purchase loan applications is due to strong home price appreciation and a lack of housing inventory in the market, especially for entry-level homes,” he said. Kan said in a press release. “The slower growth in government buying activity is also contributing to higher loan balances and suggests that potential first-time buyers are struggling to find homes to buy in their price range.”
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Meanwhile, higher rates may have contributed to a slowdown in refinancing. The refinance share of mortgage activity fell to 60.3% of total applications from 64.1% the previous week, the MBA said. The Refinance Index, a measure of the volume of refinance requests, was down 3% from the previous week and 49% from the same week a year earlier.
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