In a recent CNBC interview, Kansas City Federal Reserve President Esther George noted that the Fed is looking to tighten financial conditions, of which equity markets are a component, in an effort to tamp down price increases running at their fastest pace in more than 40 years.
Rapidly rising mortgage interest rates are having a direct impact on mortgage application volumes, particularly for mortgage refinance applications. In an article by Adam DeSanctis for the Mortgage Bankers Association (MBA) “The Market Composite Index, a measure of mortgage loan application volume, decreased 8.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 8 percent compared with the previous week. The Refinance Index decreased 14 percent from the previous week and was 54 percent lower than the same week one year ago.”
Whether you are in the market to buy or refinance a home, everyone is talking about the rising mortgage interest rates! Many predictions and questions are included in conversations on this topic, along with the variety of national and worldwide changes that are affecting the rates.
According to the Mortgage Bankers Association (MBA) Market Composite Index, the Refinance Index is 50 percent lower compared to the same week one year ago, in January 2021. During the same week there was a small uptick over last year in purchase mortgage activity.
Fannie Mae and Freddie Mac expanded a home refinance program that helps low-to-moderate income households, giving them a better opportunity to refinance now while interest rates are low. The program was launched in June of 2021, but recently the income limit qualifier was increased as well as other modifications to the program to reach more homeowners.
Residential Purchase Mortgage Applications posted the largest increase since early July, which many sources say is a result of increased inventory and slightly reduced mortgage interest rates.
Many people working in the real estate and mortgage industry, as well as those considering buying or selling real estate, are watching the news and reports on expected changes from the Federal Reserve.
CNBC conducted a survey and share the results in this article written by Steve Liesman for CNBC:
If you’ve found yourself confused by recent headlines relating to mortgage interest rate, you are not alone! When reliable sources report contradictory information, even the leaders in the industry are left scratching their heads.
In a recent article on Reuters.com they report that “Fed officials agreed last month to leave interest rates near zero and to keep purchasing $120 billion a month in bonds until the U.S. economy makes substantial further progress toward the Fed’s goals for inflation and maximum employment” They further inform us that “Fed Bank President Robert Kaplan said on Monday that he still thinks it is possible the U.S. central bank could raise interest rates before the end of 2022, reaffirming the projection he made during the March policy-setting meeting.“
MortgageNewsDaily.com reports that according to Ice Mortgage Technology (formerly Ellie Mae), in their Loan Origination Report for January, “closed loans continued to show declining note rates in January, dropping from an average of 2.93 percent in December to 2.88 percent” and also includes “Interest rates continued to decline in January, driving up the share of refinances by seven percent,”