Average mortgage loan size holds near record despite 4% rates
The rate on the 30-year fixed mortgage increased to 4.06% from 4.05% in the prior week
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Mortgage rates continue to climb, putting a damper on interest in mortgage applications.
Demand for applications dropped 13.1% from a week ago, according to the weekly survey from the Mortgage Banker's Association.
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"Mortgage applications dropped to their lowest level since December 2019 last week, as mortgage rates continued to inch higher, said Joel Kan, MBA’s associate vice president of economic and industry forecasting. "The 30-year fixed rate was 4.06%, almost a full percentage point higher than a year ago."
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Despite rising mortgage rates, those interested in buying a home have been pushing the average loan size to record levels. The average loan size has hovered around $453,000 during the past couple of weeks.
The housing sector has seen rising loan balances as inventory for entry-level buyers remains tight.
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The Refinance Index decreased 16% from the previous week and was 56% lower than the same week one year ago.
"Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022," added Kan.
New Homes in Northern California (iStock).
The seasonally adjusted Purchase Index decreased 10% from one week earlier.
"Purchase applications, already constrained by elevated sales prices and tight inventory, have also been impacted by these higher rates and declined for the third straight week," said Kan.
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The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.