The United States had one of the deadliest hurricanes on record at the same time that mortgage rates were at their highest level in more than 20 years. This caused a sharp drop in the number of people wanting to get a mortgage.
The Mortgage Bankers Association’s seasonally adjusted index shows that the number of mortgage applications dropped 14.2% from the week before to the lowest level since 1997.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $647,200 or less went up from 6.52% to 6.75%. For loans with a 20% down payment, points went down from 1.15 to 0.95, including the origination fee.
“The current rate has more than doubled in the past year, and it has gone up 130 basis points just in the last seven weeks,” said MBA economist Joel Kan.
The number of refinances, which is most affected by weekly changes in interest rates, fell 18% last week and was 86% lower than the same week last year. Last week, 30.2% of all mortgage applications were for refinancing. This week, that number dropped to 29.1%.
The number of mortgage applications to buy a home dropped 13% in one week and 37% in one year.
“There were also effects from Hurricane Ian’s arrival in Florida last week, which caused a lot of schools and businesses to close and people to leave their homes. “Without taking into account the seasons, applications fell 31% in Florida and 14% overall,” Kan said.
As interest rates went up, the already expensive housing market got even more expensive, so more people turned to adjustable-rate mortgages, which have a lower interest rate. This share of activity went up to 11.8% from 8.5% a month ago and around 3% at the beginning of the year, when mortgage rates were about half of what they are now.
This week, mortgage rates went down a little bit, according to another survey from Mortgage News Daily. However, nothing is certain until the important monthly employment report comes out at the end of the week. Mortgage rates could move decisively in either direction, depending on how investors see the results and how the Federal Reserve might react to those results.
