Mortgage demand jumps, despite rising interest rates
PHOENIX (3TV/CBS 5) — Last week, the average 30-year mortgage interest rate ticked up to 7.31%. Despite the increase, the number of mortgage applications went up by more than 5%, according to the Mortgage Bankers Association. “There’s a hyper fixation on mortgage interest rates right now. When we speak with clients and they’re focused on interest rates, I talk about the interest rate as the tip of the iceberg,” said Trevor Halpern, a Valley real estate agent. “What’s below it is a mix of logic and emotion. From the logic side, if you wait another year, yes, interest rates may go down 1%, but home values are probably going to go up by 3 to 5%. You’re missing out on appreciation. You’re missing out on a lifestyle lift. Does that backyard serve you and your family? Does a smaller house serve you and your family? What serves you best? And if you’re hyper-focused on the interest rate, you’re missing the big picture of home ownership.”
The MBA also reported a 13% jump in applications to refinance homes last week, compared to the previous week. “We’re seeing a lot of people who are refinancing right now to get out of other really sticky debt, high-interest debt, credit cards, potentially car loans,” Halpern said. “They’re tapping into the equity that they’ve built in their home to pay that off and make it so that their total monthly payment across all debt owed is significantly lower.”
Wednesday, the Federal Reserve put a pause on interest rate increases. The Central Bank’s key interest rate does not directly impact mortgage rates. The mortgage industry is more closely tied to the 10-year Treasury yield, but the Fed’s take on inflation and the economy can have indirect impacts on all borrowing, including mortgages.
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