Mortgage demand in 2022 may hit record even as rates rise
The 30-year fixed rate increased 6 basis points to 3.33%
Mortgage rates fall to a four-week low amid declining supply of homes
Romer Debbas managing partner Pierre Debbas argues the majority of real estate activity taking place is in the high-end market with first-time homebuyers 'suffering' due to 'being priced out.'
Interest in purchasing a home dipped during the holidays as interest rates inched up, but as a whole, it was a banner year for home purchases.
Overall demand for mortgage applications fell 2.7% in the final two weeks of the year, according to the weekly survey from the Mortgage Banker's Association.
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The seasonally adjusted Purchase Index decreased 4% during that time.
Market experts see an even bigger year ahead in 2022.
"Despite supply and affordability challenges, 2021 was a record year for purchase originations," Joel Kan, MBA’s associate vice president of economic and industry forecasting. "MBA expects 2022 to be even stronger, with total purchase activity reaching $1.74 trillion.
RED-HOT HOUSING MARKET FUELS MORTGAGE BORROWING RECORD
The 30-year fixed-rate increased 6 basis points to 3.33%.
That had an impact on refinancing.
"The higher rates to close 2021 caused refinance activity to decrease 2.2 percent. Refinance demand continues to dwindle, as many borrowers refinanced in 2020, and in early 2021 – when mortgage rates were around 40 basis points lower," said Kan. "The purchase market also finished the year on a slower note, with the final week coming in at the weakest since October 2021."
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The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.