{"id":159740,"date":"2023-10-04T14:38:52","date_gmt":"2023-10-04T20:38:52","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=159740"},"modified":"2024-02-28T08:49:33","modified_gmt":"2024-02-28T15:49:33","slug":"mortgage-rates-reach-multidecade-highs-as-housing-demand-slips","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/mortgage-rates-reach-multidecade-highs-as-housing-demand-slips","title":{"rendered":"Mortgage Rates Reach Multi-Decade Highs\u2014Now Demand is Falling"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC9677357954\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">Mortgage rates hit their&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.freddiemac.com\/pmms\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">highest point in nearly 23 years<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;last week, and consumers responded accordingly. According to the Mortgage Bankers Association (MBA), mortgage applications to purchase a home were down 27% compared to a year ago, while refinance applications were 21% lower.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cOverall applications declined, as both prospective homebuyers and homeowners continue to feel the impact of these&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/fannie-mae-expects-a-recession-is-there-opportunity-for-investors\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">elevated rates<\/span><\/a><span data-preserver-spaces=\"true\">,\u201d says Joel Kan, MBA vice president and deputy chief economist, in a press release.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cElevated\u201d is certainly one way to put it. The average rate on 30-year, fixed-rate mortgages hit 7.31%\u2014the highest level since late 2000. At the same time, jumbo mortgage rates hit their highest point in&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.mba.org\/news-and-research\/newsroom\/news\/2023\/09\/27\/mortgage-applications-decrease-in-latest-mba-weekly-survey\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">MBA\u2019s recorded history<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;(since 2011).&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Clearly, higher financing costs aren\u2019t great for investors, but less competition from homebuyers could certainly be a good thing. The question is, will these trends continue, and if so, for how long?&nbsp;<\/span><\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_651dccc443204: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_651dccc443204\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/mortgage-rates-reach-multidecade-highs-as-housing-demand-slips', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/mortgage-rates-reach-multidecade-highs-as-housing-demand-slips',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/mortgage-rates-reach-multidecade-highs-as-housing-demand-slips', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">All Eyes on the Fed<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Mortgage rates have been rising since the Federal Reserve started raising the federal funds rate last March. In fact, since that first rate hike, the average 30-year mortgage rate has gone from under 4% to the 7.31% we see today.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">At last month\u2019s meeting, though, the Federal Open Market Committee (FOMC) ultimately decided to pause its rate hikes, keeping the federal funds rate at the 5.25% to 5.50% range it\u2019s been at since July.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Does that pause mean mortgage rates will fall soon? Probably not. The Fed\u2019s move was likely temporary. According to their quarterly projections, not only did FOMC members overwhelmingly indicate another rate hike is on the horizon before the end of the year, but Fed Chair Jerome Powell has also said as much, indicating the group thinks rates will need to be held higher for an extended period of time to help the economy reach that magic 2% inflation rate.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Said Powell in a post-meeting press conference:<\/span><\/p>\n\n\n\n<p><em><span data-preserver-spaces=\"true\">\u201cWe are committed to achieving and sustaining a stance of monetary policy that is<\/span><\/em><\/p>\n\n\n\n<p><em><span data-preserver-spaces=\"true\">sufficiently restrictive to bring inflation down to our 2% goal over time. FOMC participants wrote down their individual assessments of an appropriate path for the federal funds rate based on what each participant judges to be the most likely scenario going forward. If the economy evolves as projected, the median participant projects that the appropriate level of the federal funds rate will be 5.6% at the end of this year, 5.1% at the end of 2024, and 3.9% at the end of 2025.\u201d<\/span><\/em><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">As of now, CME Group\u2019s FedWatch Tool projects the next rate hike will come at the FOMC\u2019s Dec. 13 meeting. Should that increase come to fruition, it likely means higher mortgage rates for longer\u2014and the same resulting pullback in consumer demand.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Other Factors That Could Play a Role<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Interest rates aren\u2019t the only thing that could keep demand low, either. Student loan repayment just resumed as of Oct. 1 (after over three years on pause due to the pandemic), hitting many potential homebuyers in the pocketbook.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">There\u2019s also a United Auto Workers strike, which could put a dent in the economy, as well as a looming government shutdown. While Congress actually passed a last-minute bill to keep the government open this weekend, it will only fund the government until mid-November\u2014right after the Fed\u2019s next meeting (and potential rate hike).&nbsp;<\/span><\/p>\n\n\n\n<p><strong><em><span data-preserver-spaces=\"true\">Related:&nbsp;<\/span><\/em><\/strong><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-are-investors-ignoring\" target=\"_blank\" rel=\"noopener\"><strong><em><span data-preserver-spaces=\"true\">Today\u2019s Real Estate Risks: What Are Investors Ignoring?<\/span><\/em><\/strong><\/a><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">All of these factors could spell financial struggle for American consumers, pushing homebuying demand down even further. MBA actually projects purchase originations to fall by about $5 billion between this quarter and the next and another $34 billion by the first quarter of the year.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Bottom Line<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Conditions aren\u2019t going to be great for American homebuyers for the foreseeable future. Investors, though\u2014especially those who can&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/cash-transactions-now-making-up-a-third-of-sales\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">pay cash<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;and avoid today\u2019s rising mortgage rates\u2014could be uniquely poised to benefit, enjoying less competition, fewer bidding wars, and, in some places, even lower home prices.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_e9ab9f30ee26ce7c19da5012ba398e42\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_cdfed4c4171e8e480653c811d4df27ad\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p><\/p>\n\n\n\n<div id=button-custom-event-block_9d5ed5daa403b84432b82908f58ac608 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/mortgage-rates-reach-multidecade-highs-as-housing-demand-slips&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/mortgage-rates-reach-multidecade-highs-as-housing-demand-slips&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Mortgage rates raised the bar again last week as the market begins to seriously slow down. What comes next? <\/p>\n","protected":false},"author":613679,"featured_media":155261,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8,7119],"tags":[],"class_list":["post-159740","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/159740","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613679"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=159740"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/159740\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/155261"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=159740"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=159740"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=159740"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}