Business is booming.

Mortgage rates rise for fourth straight week – reaction pours in

Indeed, mortgage applications have plummeted amid hikes to the 30-year fixed rate. The Mortgage Bankers Association last month reported a 13.3% decline in mortgage applications as purchase applications fell to their lowest level since 1995.

Genevieve Roch-Decter, CFA, used the example of the impact on a median-priced home at a 7% rate. A down payment on a $467,700 home would require a $93,540 down payment with monthly mortgage payments of $2,514. “Is this doable for the average American?” she asked rhetorically.

“No-one is selling real estate and getting rid of a 3% mortgage when interest rates are 7% today,” Andrew Lokenauth of observed. “This is called the ‘golden handcuff.’ They are handcuffed to the property (financially tied to property due to low-interest rates), and not selling to keep it.”

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