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The housing market is showing more signs of slowing. Purchase applications fell 1% last week compared to the previous week and volume is now 14% lower than a year ago, the Mortgage Bankers Association’s latest index shows.
Overall, mortgage demand, which includes applications for refinancings and home purchases, has fallen to its lowest level since December 2018.
Mortgage rates have been moving higher over recent weeks, leading to the softening demand, analysts say. The average contract interest rate for 30-year fixed-rate mortgage loans with a 20% down payment was 5.33% last week, the MBA reports.
Rising interest rates and home prices have been dampening housing affordability, at least for some price segments. “Demand is high at the upper end of the market, and the supply and affordability challenges are not as detrimental to these borrowers as they are to first-time buyers,” says Joel Kan, an MBA economist.
The average contract interest rate for a 30-year fixed-rate mortgage with a jumbo loan balance—that is, greater than $647,200—fell to 4.93% last week from 5.02%, the MBA reports.