The mortgage rates have started increasing again after a brief reprieve in May. The average contract interest rate for the 30-year fixed-rate mortgages rose from 5.40% to 5.65% last week. The average rate hit 6.28% after increasing ten basis points earlier this week.
The rising mortgage rates have caused a sharp turnaround in the housing markets as mortgage demand has plunged. Mortgage demand was at its lowest level in 22 years. Last week, the total mortgage application volume was 52.7% lower than the same week a year ago. MBA economist Joel Kan said, “The purchase market has suffered from persistently low housing inventory and the jump in mortgage rates over the past two months. These worsening affordability challenges have been particularly hard on prospective first-time buyers.”
