Since the start of this year, mortgage rates have been climbing. Rates have jumped over the past few months at a pace not seen in decades. The average interest rate for a 30-year mortgage has now reached 5%. Interest rates officially rose to 5.08% on Wednesday April 6, according to Mortgage News Daily.
The most recent motivation for this upward momentum was yesterday's speech from Federal Reserve, Vice Chair Lael Brainard, who warned of the need for the Fed to move more rapidly to reduce the size of its balance sheet. This means that the Federal Reserve will buy fewer bonds.
In this week's Mortgage Application Survey from the Mortgage Bankers Association (MBA), refis dropped another 10 percent, and are now 62 percent lower than the same week last year.
The purchase market remains a different story. While purchase applications also declined last week, they are only 9 percent below the same week last year and still higher than most of the past decade before the Covid. Keep in mind that the survey only tracks applications, so by the time all-cash demand is factored into the purchase market, housing demand has yet to show any major panic over the rising rate environment.
Homebuyers are already facing the priciest housing market in recorded history; higher mortgage rates only add to the struggle.
Getting preapproved for a mortgage can help you during the homebuying process. Mortgage preapproval represents a lender’s offer to loan you money. It can help you appear more attractive to sellers.
To get preapproved for a mortgage, start by gathering documents. You’ll need your Social Security card, W-2 forms, pay stubs, bank statements, tax returns and any other documents your lender requires.