Mortgage Applications Tank As Interest Rates Soar

by | Oct 17, 2018 | Headline News | 14 comments

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    Weekly mortgage application fell a whopping 7.1% as the cost of borrowing money surged.  Interest rates are climbing higher making debts more expensive, so naturally, fewer people can now afford to buy homes.

    Rising interest rates appear to be the main culprit behind the tanking of new mortgage applications. Buyers just don’t want to pay the higher rates, which are now at an 8-year-high. According to CNBC, homebuyer demand is strong, but affordability was weakening even before rates began to rise, as tight supply pushed home prices sharply higher. The housing market is definitely cooling off now.

    Total mortgage application volume fell 7.1 percent for the week, according to the Mortgage Bankers Association’s (MBA) seasonally adjusted report. Volume was 15 percent lower compared with the same week one year ago. There was no adjustment made for the holiday, Columbus Day, in which banks were closed. With fewer borrowers now able to benefit from a refinance, refinance volume, which had been the majority of mortgage business following the recession, fell to 38.1 percent of total applications from 39 percent the previous week. Applications to refinance a home loan are highly sensitive to even the smallest rate adjustments.  They fell 9 percent for the week and were 33.5 percent lower than a year ago. Rates have moved 22 basis points higher in the past four weeks and have jumped 96 points in the past year.

    “Treasury rates increased over the week, mainly as communication from Federal Reserve officials pointed to a continued path of rate hikes, based on the strength of the economy and hot job market,” said Joel Kan, an MBA economist according to CNBC. “Furthermore, four out of the five rates tracked in our survey increased.”

    While there was some concern that this is bad news for the economy in general, others were more optimistic. The association’s new CEO, Robert Broeksmit is one who looked on the bright side. “Well, of course, I’m concerned, but I’m optimistic because the economy is so strong and the millennials are out buying houses and the demand is so high. We do have to work on the supply side,” said Broeksmit. “I think what you’ll see is as the rates continue to tick up, home price appreciation, the pace will slow, and there will be an equilibrium over time.”

    But is he right? Are millennials buying houses? According to several reports, most millennials can’t actually afford to buy homes partly because their student loan debt is outrageous and they have taken jobs paying them much less than they anticipated. In addition to high interest rates and potentially negative effects on credit scores associated with student loans, millennials are earning less and struggling to find jobs compared with previous generations, reported Upworthy. It’s no surprise that saving for a down payment for a house is nearly impossible for many millennials.

    This could be a sign of a weaker economy, or it could be an evening out of the housing bubble that we’ve been in for a while.  Either way, it isn’t as positive or optimistic for those trying to afford a house.


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      1. What was the word used in the movie The Big Short”


      2. Trash all of the regulations preventing tiny house building and living in would help. Too easy a solution and more reflective of reality. Tell all the gouging thieves to shove it. Anything that makes sense really.

        • Interest rates are divorced from capitalisms governance, “supply and demand”, having become, by Federal Reserve decree a tool of central control of the economy with some kind of perverted fascist/communist hybrid.

          “Anything that makes sense really.”

          It all makes no sense because there is no reality.

          • It doesn’t matter to me about mortgages since I’ve never been qualified for one anyway. I’ve always had to either rent or become homeless. Once I move into the BOL permanently I won’t even have rent to worry about. The property was totally paid off 13 years ago.

        • Aljamo, good advice. While they’re at it, make it easier for people to qualify for mortgages so they can get away from apartment complexes, some of which have the section-8 hoodrats. That’s who responsible for all the trouble in those places. Section-8 should be scrapped altogether. Why should I have to help pay for some freeloader’s rent when I sometimes have trouble paying my own bills? The ‘great culling’ can’t come soon enough.

      3. When the interest rates go up the prices slow or go down,happens every time.

      4. There will be housing rebuilds from hurricanes, tornadoes, floods,
        Fires, remodels and the usual kids growing up.

        But who can afford a new home….when the wheels are falling
        off of the wagon??

        Insurance companies are going to go broke trying to keep up.

        Of course the Trumpster wants the billions of dollars from
        the Saudi’s for our supplies of warfare armaments.

        I can’t help but think those same arms will be used on us if
        the public ever finds out that Saudies financed both sides of
        the M. East wars, ??
        9-11-2001 Towers, and missing $$$$$$$$$ ??
        Las Vegas Massacre, ??

        So many questions….. so few answers!!!!

      5. What is a average interest rate % for a home loan now?

        • 4-5%

      6. Housing is over priced and restrained supply. Both will regress to the norm. Never buy the rate. Buy on cost. Most people don’t live in houses for more than 7-10 years depending on who you ask. The rates going up hurt because people don’t have a clue about investing. I cheer them and when idiots dump houses I will buy more…based on price.

      7. If the fed was non political it would set 2 fed funds rates. One controlling funds rates for under 10 yr loans banks can make and one controlling over ten yr rates. The fed knows slowing housing is a death nail to any economy. A moron knows this. Mortgage rates increasing has caused every recession since 1942. Everytime. Funny how Trump was only in office 90 days and rates started increasing because everyone knew his policies were pro america and pro capitalist unlike the america hating obunghole. There was no need to crush the economy as obunghole was masterful at killing america and capitalism. These people want us hating on each other and broker so they can throw bread at circuses and appease the commoners…..until they take away guns so they cannot revolt and win. Divide and conquer us, keep up the hate.

        Conclusive effective way to win. We pick a date and all true patriots stop paying taxes and stop spending and crash it all. That way we know when the crash comes and would be prepared. They want to drain us, break us then after we are totally broke and starving we beg for socialism and eradication of the amendments if we accept their handouts. Thats their motives. Bastards all of them.

      8. According to the latest stats, the 10-year Treasury rate is currently 3.02-percent. That means a 30-year fixed mortgage is at 5-percent.

        If people can afford a house, more importantly afford everything that comes with a mortgage — property and school taxes, the utilities (like electric, gas, phone, garbage pick-up, tools, a lawnmower, lawn care products, etc. and etc.), then nothing stands in their way.

        Back in the late 1970s and early 1980s when mortgage rates were in the double digits, people were still buying homes. But that was then. Things were cheaper. Your money went farther.

        Not any longer. Anything that can cost money, costs as much as these banksters and corporate oligarchs can get away with. Today, the whole economy is a lie. We are all renters now.

        “The current inflation rate for the United States is 2.7% for the 12 months ended August 2018, as published on September 13, 2018 by the U.S. Labor Department.” That is the official figure. In reality the rate is more like 15-percent.

        Mortgage rates have a lot of catching up to do.

      9. Any financial move that you make that lowers your cost of living has the added benefit that it is not subject to income taxation. Buying a house with a long-term mortgage effectively locks you in on housing costs which keep increasing. The lower interest rates allowed people who couldn’t qualify for loans to qualify. For people just starting out, they could look forward to rising incomes. As long as your financial condition is improving, the burden of the mortgage payments grow less burdensome. That’s not a sure thing anymore and bad times will see a lot of those mortgages go into default. Interesting times we live in!

      10. Wet coast property is crashing all the way down to CA.I live in my BOL in the Oregon woods. The Chinese investors can not sell fast enough. The amount of ore-foreclosures is 30% of the Home’s for sale. 1/3 are in default. It will be worse than 2008.

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