Mortgage rates for the month of October have reached the highest level in eight months, triggering the slowest pace of refinance activity since January 2020.
As home prices rise, average loan sizes are growing and mortgage applications to purchase a home are decreasing on a yearly basis, says CNBC
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.30% from 3.23%, with points decreasing to 0.34 from 0.35 (including the origination fee) for loans with a 20% down payment. That rate was 30 basis points lower one year ago.
As a result, refinance demand fell 2% week to week, seasonally adjusted. Volume was 26% lower than the same week one year ago. The refinance share of mortgage activity decreased to 62.2% of total applications from 63.3% the previous week.
“The increase in rates triggered the fifth straight decrease in refinance activity to the slowest weekly pace since January 2020. Higher rates continue to reduce borrowers’ incentive to refinance,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting, in a release.