The Federal Reserve plans on raising interest rates in 2022, which is putting borrowers looking to get a mortgage or refinance their current one on the clock.
Warning that high inflation could make it harder to restore the job market to full health, Federal Reserve Chair Jerome Powell said Tuesday that the Fed will raise interest rates faster than it now plans if needed to stem surging prices.
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Rates were on the rise in the past week as the 30-year fixed-rate mortgage increased to 3.52% from 3.33%.
“Mortgage rates increased significantly across all loan types last week as the Federal Reserve’s signaling of tighter policy ahead pushed U.S. Treasury yields higher,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Rates at these levels are quickly closing the door on refinance opportunities for many borrowers”.
POWELL PUMMELED OVER INFLATION, JOBS AT CONFIRMATION HEARING, DESPITE BIPARTISAN SUPPORT FOR FED CHAIR
The Refinancing Index declined 0.1% from last week.
Conventional refinance applications were at their lowest level since January 2020.
Overall, applications for mortgages rose 1.4% from the prior week, according to the weekly survey from the Mortgage Banker’s Association.
The Purchase Index increased 2% from one week earlier.
“MBA expects solid growth in purchase activity this year, as demographic drivers and the strong economy support housing demand,” added Kan. “However, the strength in growth will be dependent on housing inventory growing more rapidly to meet demand.”
The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.