Mortgage rates

The latest Federal Reserve move to combat inflation led to a weekly increase of more than 50 basis points.

Unlike two years ago, when the surge of refinance loans created a vast pool of free financing for the industry to use, today lenders must pay for it by the drink.

Rising interest rates eliminated any refinance incentive for 30% of the loans analyzed by Standard & Poor's, marking a turnaround from the start of the year when prepay speeds were expected to increase

While rate and term refinancings had the largest drop in volume, credit scores for cash-outs are 33 points lower than one year prior, indicating that these borrowers need financial liquidity, a Black Knight report found.

A positive employment report, robust consumer spending and Fed comments on inflation counter measures drove rates upward.

Lenders reduced refinance and jumbo programs on their product menus as interest rates continued to rise in May, the Mortgage Bankers Association said.

With half-point interest-rate increases all but certain in June and July, Federal Reserve officials are shifting the focus away from a destination on hikes to something that’s trickier to determine and explain: the broader impact of their policies on the economy.

The inventory shortage is beginning to ease, while demand is slowing due to high prices and rising mortgage rates.

With anticipated Federal Reserve moves already factored in, inflation and jobs data could play a bigger role in driving movement over the near term.

The 30-year average decreased for the second week in a row but still is almost 2% higher than its year-end 2021 level.

Yields have jumped so much this year, nearly doubling those on 10-year Treasuries, that it recalls past buying opportunities that paid off when the tide turned.

Federal Reserve Bank of Atlanta President Raphael Bostic said policy makers could potentially pause interest-rate increases in September after hiking by a half point at each of their next two meetings.

Current volatility has contributed to slowdowns across the industry, with further reduced originations now predicted for the year.

Signs of deteriorating liquidity in U.S. Treasuries, such as measures of market depth and bid-ask spreads, are “more or less in line with the increase in volatility in markets,” New York Fed President John Williams said Monday.

But growing worries about a possible recession may also end up playing a role in their direction over the coming weeks.

The moves were widely anticipated, with the markets already pricing them in, as the central bank attempts to get the upper hand on record-setting inflation.

The Federal Reserve delivered the biggest hike in interest rates since 2000 and announced it would start shrinking its massive balance sheet next month, deploying the most aggressive tightening of monetary policy in decades to combat soaring inflation.

Nearly two-thirds were willing to make an offer within three days of viewing a house; 20% stated they would do so on the same day.

But the recent spike has contributed to a noticeable downturn in purchase demand, according to Freddie Mac.

Recent affordability and interest rate trends led to “clear evidence” of discouragement among potential consumers in the purchase market in the first three months of 2022, according to the National Association of Home Builders.