How Rising Interest Rates Have Impacted Mortgage Applications
A gauge of U.S. mortgage applications fell last week to the lowest level in almost four years as borrowing costs hit the highest since 2010, adding to challenges for the housing market. The Mortgage Bankers Association’s market composite index fell 4 percent in the week ending Nov. 2 to 316.2, the lowest reading since December 2014, according to a report Wednesday from the Washington-based group. The survey’s contract rate on a 30-year fixed loan rose to 5.15 percent from 5.11 percent, while a gauge of applications to purchase homes dropped 5 percent to the lowest in about two years.
The data signal higher mortgage costs are an ever-growing headwind for U.S. home buyers, who already face a dearth of affordable listings. Residential investment has been a drag on economic growth for five of the past six quarters, and recent data show cooling in sales in construction.
Higher borrowing costs have come as the Federal Reserve raised interest rates eight times since December 2015, part of a strategy to keep a strengthening labor market from overheating. The central bank’s Federal Open Market Committee starts a two-day meeting Wednesday in Washington, and is expected to hold off on another hike but leave open the possibility of one in December.
Higher mortgage rates mean now is a good time to buy a home as higher home prices are likely to become more affordable and home buyers will have a better chance of finding a home in their price range and more likely to have an offer accepted. Its important to note that while higher rates may drive prices down, a higher interest rate does impact your buying power
So, if you’re in the market to buy a home, now is the perfect time take advantage before rates go up more, and your buying power goes down. If you’d like more information about qualifying for a home loan for a Prescott home, or if you’re interested in building a custom home in Prescott, please contact Crystal Creek Builders.
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This communication is provided to you for informational purposes only and should not be relied upon by you. Crystal Creek Builders and Crystal Creek Homes and Realty are not a mortgage lender and so you should contact a qualified mortgage broker directly to learn more about its mortgage products and your eligibility for such products.