Last week, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 6.43% from 6.30% the previous week.
Today's homebuyers appear to be increasingly sensitive to weekly moves in mortgage rates. While home prices are easing some, affordability is still a major hurdle, especially as more first-time buyers enter the market. As a result, mortgage applications to purchase a home dropped 10% from the week before, according to the Mortgage Bankers Association's seasonally adjusted index. Buyer demand was 36% lower than the same week one year ago when the 30-year fixed-rate mortgage averaged 5.20%.
But wealthier buyers may also be seeing new difficulties when it comes to credit. Banks had been offering better rates on jumbo loans, but that spread between jumbo and conforming loans is much tighter now, compared with last year. This has to do with recent regional bank failures that have rippled through the industry.
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