The mortgage market had a bit of a slump in demand as mortgage rates began to move up in the most recent reading, according to the Mortgage Bankers Association’s weekly report. Refi applications decreased by 0.3%, while purchase applications decreased by 4.3%. Overall demand was down 6.2% from last week.

Larry Kantrowitz, senior economist at global financial data and analytics firm FactSet, noted that mortgage rates increased substantially following the Federal Reserve meeting, where the central bank maintained its commitment to an accommodative policy despite its recalibration of the economic outlook. Mortgage rates are rising closer to 7%, the highest level since GFC in 2008.

Kantrowitz noted that applications have been trending downward for the last few weeks, a trend that has been happening for the last month or so. Though refi applications decreased slightly, purchase applications took the brunt of the hit. It is possible that potential buyers are holding off on committing to long-term loans due to the anticipation of higher mortgage rates in the future.

The current mortgage rate increase is a result of Federal Reserve’s rate hike and its stated commitment to inflation which has led to a rise in longer-term Treasury yields and mortgage rates. It is uncertain whether rates will stay at this current level. Prospective borrowers should take into account the possibility of rates going up as they decide on whether to lock in their mortgage rates.

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