New data from the Mortgage Bankers Association (MBA) shows that the average interest rate on one of the most popular home loans in the United States is now above 6 percent for the first time since 2008.
The new MBA data shows that rates have skyrocketed to more than double what they were just one year ago, Reuters reported.
According to CNBC, mortgage application volume dropped 1.2percent last week compared to the week before that.
Joel Kan, MBA’s associate vice president of economic and industry forecasting, said, “The spread between the conforming 30-year fixed mortgage rate and both ARM and jumbo loans remained wide last week, at 118 and 45 basis points, respectively. The wide spread underscores the volatility in capital markets due to uncertainty about the Fed’s next policy moves.”
Matthew Graham, chief operating officer of Mortgage News Daily, said of last weeks mortgage rate jump, “It was one of the last shoes to drop before the Fed announcement on September 21st, and it arrived at a time where the market had fully priced in a 75bp hike, but was willing to consider something even higher if the data was convincing.”
Investors are worried that the U.S. Federal Reserve will hike rates even more than expected in their next meeting.
Refinance demand has also fallen another 4% this week and was at 83% lower than that same week just a year ago, according to CNBC.