Since then, mortgage rates have been rising rapidly, and last week the average interest rate for a 30-year fixed-rate mortgage with conforming loan balances jumped to 4.90%.
Total mortgage application volume also fell by another 6% last week compared with the previous week, and while mortgage demand falls, there is also evidence that lending standards are getting stricter, with the MBA’s latest report showing that mortgage credit availability fell slightly by 0.7% to 125.1 last month.
Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said the drop in credit availability was driven by a reduction in higher LTV, lower credit score programs.
Industry sources consulted by Mortgage Professional America have revealed that over the last month and-a-half, lenders have also been changing loan terms and prices at the last moment in response to concerns about borrowers’ levels of debt and rising rates.
Kan last week confirmed that the financial markets “expect significantly tighter monetary policy in the coming months” as higher rates would have an impact by reducing the incentive to refinance.