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The volume of applications to refinance mortgages plunged 40 percent in this year’s first quarter, compared to a year earlier.
Rising interest rates added perhaps hundreds of dollars to monthly payments, ending homeowners’ interest in cashing out their equity and instead leaving refinancing to those who find it necessary.
Mortgage interest rates rose 1.5 percentage points during the quarter, The Wall Street Journal reported.
During the week ending 9 May, the national average rate on the 30-year, fixed-rate loan was 5.27 percent, its highest since 2009, the WSJ noted.
TREND FORECAST: Higher rates leave fewer people who can lower their monthly mortgage payment by refinancing. That pool of prospects withered from 18 million homeowners in March 2021 to under four million now, data firm Black Knight calculated. The math is simple, the higher mortgage rates rise, the deeper the housing market will fall.
We maintain—minus a catastrophic wild card, be it manmade or by Nature—our forecast that while the housing market in the U.S. will slow down, unlike the 2008 housing market debacle, this time, since the housing sector was not driven up by sub-prime mortgages, prices will decline but not crumble.