Local realtors and mortgage brokers have warned consistently that mortgage rates were destined to rise from the historic lows of the past few years. According to Mortgage News Daily (MND), some institutions posted 30-year rates of 5.08% on April 6. The Mortgage Bankers Association (MBA) listed average rates as slightly lower, at 4.90%. Regardless both are notable hikes from 4.67% last week, an increase of about two percentage points from a year earlier.
According to Freddie Mac data, the average home loan rates haven’t topped 5% since January 2010. Mortgage rates in all categories have risen slowly but steadily in the last 12 months, according to MND.
In Pasadena’s still-hot real estate market, homes continue to be swept up by ready-cash buyers along with well-qualified buyers. That may be the case in other cities as well, according to Redfin. A higher mortgage rate might only compound the problem.
According to the MBA’s unadjusted Purchase Index, which tracks mortgage applications, loan apps fell 10% year over year during the week ending March 25, for the second-straight week of double-digit annual decreases. It was up 1% week over week.
“Homebuyers may not feel like the market has gotten any easier. That’s because they’re often competing against investors, all-cash buyers and migrants from expensive cities who aren’t as sensitive to mortgage rates,” said Redfin Chief Economist Daryl Fairweather. “But there are early indicators that the market is turning, and we expect the softening to become more apparent in the coming weeks, eventually causing home-price growth to slow. We’ll be watching closely to see whether the market slows from 100 miles per hour to 90 or 100 miles per hour to 75.”
The Mortgage Bankers Association’s unadjusted Purchase Index, which tracks mortgage applications, fell 10% year over year during the week ending March 25, for the second-straight week of double-digit annual decreases. It was up 1% week over week.
And, says Freddie Mac, for the week ending March 31, 30-year mortgage rates rose to 4.67%—the highest level since December 2018, up from 4.42% the prior week. Even simple in-person home shopping numbers have fallen. Year-to-date growth in touring activity was 16 percentage points behind the same period in 2021, according to home tour technology company ShowingTime.
According to Google Trends Data, Google searches for “homes for sale” were also down 9.7% year over year during the week ending March 19, and searches for this term were flat (0%) as of late January.
Even searches for “homes for rent” and “real estate” also dropped, falling 9.6% and 5.1%, respectively. The Redfin Homebuyer Demand Index rose only 5% year over year during the week ending March 27, the smallest gain since the week ending Jan. 30, 2022. The seasonally adjusted Redfin Homebuyer Demand Index is a measure of requests for home tours and other home-buying services from Redfin agents.
But while signs point to what should be a slowing market nationwide, local homes continue to fly off the shelves. An upward nudge in mortgage rate numbers might eventually slow the market, but many local realtors vividly remember double-digit interest rates in the 90s, and continue to see busy days with fewer listings and smaller inventory, which creates its own demand, even with a slowly rising mortgage rate.
