Rising Rates Curb Mortgage, Refinancing Applications

The volume of mortgage and refinancing applications fell 8.1% last week, and sales of newly constructed homes unexpectedly dropped in February, reports showed Wednesday.

Here’s a quick look at the most significant economic indicators of the day and what they tell us.

Mortgage Applications

• Rising mortgage rates are proving a deterrent to borrowers. An index measuring the volume of mortgage applications declined 8.1% last week, largely because of a 14% drop in people looking to refinance their home loans, but also due to less interest from homebuyers, the Mortgage Bankers Association said.
• In the biggest weekly increase since March 2020, the average rate for a 30-year fixed mortgage jumped to 4.5% last week from 4.27% the week before and 3.52% at the start of the year, MBA’s measure showed. (More recent lender data shows rates rising even faster this week. The Balance’s measure rose 27 basis points just in the first two days of this week.)
• Over the last year, refinancing applications have fallen 54%, while purchase applications are down 12%. 

Sales of Newly Constructed Homes

• Sales of newly built homes unexpectedly fell in February, dropping 2% from January, to a seasonally adjusted annual rate of 772,000, the Census Bureau said. Economists had predicted 805,000, but rising mortgage rates along with shortages of supplies and labor may be dragging sales down.
• Newly built homes have been in high demand lately because so few people have been putting existing ones on the market.

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