Patrick T. Fallon | Bloomberg | Getty Images The country’s mortgage bankers are lowering their expectations for the year as a sharp rise in interest rates makes the housing market even more expensive. The Bank Mortgage Association is now asking for total mortgage loan creation, which includes refinancing loans, to total $ 2.58 trillion in 2022, down 35.5% from 2021. The previous forecast was $ 2.61 trillion. The forecast from the MBA, which represents more than 2,000 companies in the industry, reflects frightening realities for the US economy. The supply in the housing market is limited and the prices are high. The Americans are struggling with the hottest inflation of the last four decades, while the US Federal Reserve is aggressively raising interest rates to keep it under control. With interest rates rising, demand for refinancing has plummeted recently. Mortgage refinancing applications fell 5% in the most recent week, seasonally adjusted, and were 62% lower than a year ago, according to the MBA. For the whole year, the group expects a refinancing of 64%. The refinancing share of the mortgage activity fell to 37.1% of total applications last week from 38.8% the previous week. Purchases for supplies are still projected to rise to a record $ 1.72 trillion this year, but the previous forecast was for $ 1.77 trillion. “Although the current sales volume will be slightly lower than last year, the continued increase in new home sales and the rapid rise in house prices are expected to result in a smaller but steady, 4% annual increase in market volume,” said Michael. Fratantoni. Chief MBA Economist. The average contract interest rate on a 30-year fixed-rate mortgage with a 20% down payment and compliant loan balances of $ 647,200 or less rose to 5.13% from 4.90%, according to the MBA. The percentage stood at 3.27% in the same week a year ago. Points increased to 0.63 from 0.53, including fees. “Mortgage rates on all types of loans continued to move higher, with the 30-year fixed interest rate exceeding the 5% threshold – the highest since November 2018. As a result, refinancing activity fell to its lowest weekly rate since 2019 “, said Joel Kan. MBA economist. Home loan applications increased by 1% for the week, but were 6% lower than the same week a year ago. More potential buyers are now turning to adjustable interest rate mortgages, which have lower interest rates. Their share of applications last week was 7.4%, the highest level since June 2019. “In a very promising sign of strong market demand amid affordable prices, both conventional and government purchasing requests have increased,” Kan said.
