Borrowers hit by rising mortgage interest rates
Weekly mortgage applications down as homes become less affordable.
Given the recent rise in mortgage interest rates, potential first-time buyers face yet more struggles to secure a spot on the property ladder.
Taking out a mortgage to purchase a home is often seen as one of the biggest and most expensive decisions but the recent increased rates have pushed weekly mortgage applications down, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey (MBA).
MBA noted that the number of mortgage applications to purchase a home has fallen by 6.6% from the previous week, representing only a slight rise of 3.5% compared to the previous year, when rates were lower.
Even applications from homeowners wishing to refinance their home loans have dropped by 7%, the lowest level of weekly applications since July 2017.
This could mean that borrowers turn to home equity lines of credit rather than refinancing a mortgage and risk losing the low rate they already have as these have been steadily rising.
With house prices increasing as a result of the low supply of homes for sale and rising mortgage rates, homes are becoming increasingly less affordable with homebuyers left with far less purchasing power.
This could push borrowers towards adjustable-rate mortgages, which often have lower interest rates but due to their shorter terms, can be much more risky.
A house isn’t just a home, it’s an investment. If you’re taking the plunge with buying your first home, or are looking to refinance your home loan, take a closer look at our complete guide to mortgages. You can also find out exactly which different mortgage rates are available.