Having inched down to 5.09 percent last week, the average rate for a conforming 30-year mortgage has since ticked back up to 5.23 percent which is back to within 7 basis points (0.07 percentage points) of the 670-week high it hit last month.
As such, the current 30-year rate is now 227 basis points, or 77 percent, higher than at the same time last year with the average rate for a 5-year adjustable rate mortgage (ARM) having inched back up to 4.12 percent, which is over 60 percent higher than at the same time last year and 55 percent higher than the average 30-year rate in January of 2021.
And with the rise in rates, mortgage application volume in the U.S. has dropped to a 22-year low, with purchase volume down over 20 percent, year-over-year. Or as we outlined six months ago, when the average 30-year rate was closer to 3 percent, the projected rate hikes, which have since materialized, would translate into “higher mortgage rates, less purchasing power for buyers and downward pressure on home values.”
At the same time, the probability of the Federal Reserve raising interest rates by another two (2) full percentage points by the end of the year, based on an analysis of the futures market, is currently running around 85 percent, “which should translate into even higher mortgage rates, less purchasing power for buyers and downward pressure on home values.” We’ll keep you posted and plugged-in.