With the benchmark mortgage rate having jumped to a 2-year high, lending standards tightening and credit availability having dropped, including a 1.6 percent decline in the indexed availability for Jumbo loans and a 4.2 percent drop for Conforming, according to data from the Mortgage Bankers Association, loan application volumes to either purchase or refinance a home in the U.S. dropped 5.4 percent over the past week on a seasonally adjusted basis.

On a year-over-year basis, applications to purchase a home were 7 percent lower than at the same time last year while applications to refinance were down 54 percent.

And while the average purchase loan size has inched up to a record $453,000 last week, the increase was driven by an outsized drop in application volumes for government loans and a higher percentage (i.e., mix) of conventional loan activity.

Comments from Plugged-In Readers

  1. Posted by two beers

    Now’s a great time to buy a building.

    • Posted by soccermom

      How many do you own? What’s your rationale?

    • Posted by don_keesho

      I’m trying to think this through myself as I just got in contract to add a 5 unit to the portfolio. Considering the debt service increase due to higher rates -> then inflation -> rent prices/rent control -> expected cap rates…

      i just don’t see a buyer willing to pay much more for the next 3-5 years but maybe there are greater forces mounting

      • Posted by socal

        Don’t rent control laws take inflation into consideration? I believe California’s rent control ordinance allows 5% increase + CPI

        • Posted by parklife

          San Francisco limits annual rent increases to 60% of CPI. So your Real Return generally declines each year without turnover.

          With Prop 13 generally limiting property taxes to 2%, gross returns may increase somewhat now that we are in a higher inflation environment. But for the past decade or so, property tax rate increases have exceeded allowable rental rate increases.

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