Mortgage applications fall as rates rise
If you can get a low mortgage rate, you will be able to lock in affordable housing payments for years to come. And with surprisingly low rates this summer, borrowers are clamoring for home loans.
But new data from the Mortgage Bankers Association shows that mortgage applications are slowing, and we can thank rising rates for that. Specifically, new mortgage applications fell 3.3% from last week, while refinancing applications fell 5%.
Meanwhile, the average interest rate for a 30-year fixed-rate mortgage with a compliant loan balance ($ 510,400 or less in most states) fell from 3.16% to 3.13%. . This explains why some borrowers may have put their new home or refinancing plans on hold.
Still, let’s be clear: a rate of 3.13% on a 30-year fixed mortgage is very competitive in the grand scheme of things. So if you’re in the market for a new home, it’s worth considering locking out a mortgage – before rates go up further.
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Are the current rates still competitive?
Earlier this summer, the average 30-year mortgage rate fell below 3%. In light of this, anything over 3% may not seem like such a good deal. But in reality, anything around 3% is always great, so if you can lock in a 30-year mortgage at 3.13%, it’s worth doing.
To put that in context, earlier this year the average 30-year mortgage rate peaked at around 4.5%. And it stayed above 3.5% for a while. As such, it pays to lock in a mortgage fairly quickly, especially if you can qualify for a rate of 3.13%, or something close. The same is true if you are looking to refinance.
That said, not everyone will be successful in getting the lowest rates available. To benefit from these offers, you must meet these criteria:
- Have an excellent credit score – typically a mid-700s score or higher
- Have a manageable amount of debt
- Have a stable income high enough to support the loan amount you are applying for
If your credit is okay but not great, you may qualify for a mortgage or refinance, but you won’t necessarily get the lowest rates available.
Will mortgage rates continue to rise?
It is a little difficult to predict the evolution of short-term mortgage rates. There is a chance that they will slowly but steadily start to climb in the coming weeks, but we are unlikely to see too many significant jumps. In other words, the average rate on a 30-year mortgage probably isn’t going to hit 4% anytime soon, so if you’re thinking about buying a home and haven’t found one yet, don’t panic, you to do still have some time to capitalize on the historically low rates we’ve been seeing lately.
In the meantime, if you are are considering applying for a mortgage, check your credit score to see if it needs improvement. If you are not happy with the number you see, you can increase your score by paying off some of the existing debt, reviewing your credit report for errors that are unfavorable to you and correcting them, or contacting the issuers. your credit card and request a credit limit increase.
Having a strong credit rating could be your ticket to locking in a mortgage rate that makes your home more affordable for many years to come, even if that rate is no less than 3%.