Mortgage Rates Rise For Fourth Time in Five Weeks, Keeping Demand Down

Mortgage rates rose for the fourth time in five weeks, reaching their highest levels since July.

The Mortgage Brokers Association reported that the 30-year mortgage rate rose to 6.73% for the week ending October 25. Since bottoming recently in September, mortgage rates have increased about 0.6 percentage points.

The rise in borrowing costs comes as Treasury yields reach their highest levels since July, with the 10-year Treasury note rising above 4.2% in recent days. The 10-year Treasury is one of the main factors that affect mortgage rates.

Demand for mortgages declines as interest rates rise

Due to increases in interest rates, mortgage demand remained relatively steady, with mortgage application volume falling marginally from the previous week amid rising mortgage rates.

However, the recent rise in borrowing costs has led to a reversal in recent home loan trends; Refinancing activity is declining after rising in the summer. Refinancings were down 6% compared to the previous week’s total, although they are still much higher than a year ago when mortgage rates were higher.

Meanwhile, buying activity remained high, up 4% from last week’s numbers and was 10% better than the same time last year.

The increase in purchasing activity comes as more homes are offered for sale. A recent study by Realtor.com showed that the number of home listings rose more than 11% to a three-year high.

“We continue to expect housing demand from younger homebuyers to support purchase growth over the next few years as for-sale inventory gradually declines,” said Joel Kahn, MBA vice president and deputy chief economist.