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August 7, 2013

Are Higher Rates Hurting Home Purchases?

August 7, 2013

Are Higher Rates Hurting Home Purchases?

MBA  Applications (week ended 8/2/2013)

– Purchase Index Week/Week +1.0%. Previous weeks were -3.0%, -2.0%, +1.0%, 3.0%, -3.0%, +2.0%, and -3.0%.

– Refinance Index Week/Week +0.0%. Previous weeks were -4.0%., +1.0%, -4.0%, -4.0%, -16.0%, -5.0%, and -3.0%.

– Composite Index Week/Week +0.2%. Previous weeks were -3.7%., -1.2%, -2.6%, -4.0%, -11.7%, -3.0%, and 3.3%.

The Purchase Index is what is important for the economy. The fact is that higher mortgage rates have hurt purchases as well as refinancing.  Higher rates mean higher payment at a given loan amount and make it tougher for folks to qualify for mortgages.  This is going to get worse after January 10, 2014 when the new rules for Qualified Residential Mortgages lower the maximum debt ratio to 42.0%.