Long-term mortgage rates see uptick, market continues to shrink

But economist is hopeful that easing inflationary pressures will lead to lower rates in 2023

Long-term mortgage rates see uptick, market continues to shrink

The benchmark 30-year fixed mortgage rate inched higher this week, continuing to put a strain on affordability and keeping potential buyers on the sideline.

Freddie Mac reported Thursday that the average 30-year fixed-rate mortgage climbed six basis points to 6.48%. The 15-year rate posted a five-basis-point increase from last week to an average of 5.73%.

“Mortgage application activity sunk to a quarter-century low this week as high mortgage rates continue to weaken the housing market,” said Freddie Mac chief economist Sam Khater. “While mortgage market activity has significantly shrunk over the last year, inflationary pressures are easing and should lead to lower mortgage rates in 2023.”

According to the Mortgage Bankers Association, total mortgage applications tumbled to the lowest level in 27 years, down by 13.2% on a seasonally adjusted basis. Refinance applications were down by 16.3% week over week, and purchase activity fell by 12.2%.

“Homebuyers are waiting for rates to decrease more significantly, and when they do, a strong job market and a large demographic tailwind of Millennial renters will provide support to the purchase market. Moreover, if rates continue to decline, borrowers who purchased in the last year will have opportunities to refinance into lower rates.”

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