Home borrowing costs rose this week but seem to be stabilizing after the surge in borrowing costs in the past 12 months. Freddie Mac reports that the 30-year fixed-rate mortgage rose to 5.54% this week from 5.51% last week with an average of 0.8 in points and fees. A year ago the rate was 2.78%. The 15-year rose to 4.75% from 4.67% last week with a 0.8 point. A year ago that 15-year was 2.12%. Sam Khater, Freddie Mac’s Chief Economist said, "Consumer concerns about rising rates, inflation and a potential recession are manifesting in softening demand. As a result of these factors, we expect house price appreciation to moderate noticeably."
In economic news, Weekly Initial Jobless Claims rose 7,000 to 251,000 versus the 240,000 expected. The unemployment line is slowly getting longer but the numbers are still historically low. The Philly Fed Index in July fell 12.1 from -3.3 in June and below the -2.5 expected. Disappointing earnings released today are weighing on the stock markets with the closely watched Dow Jones Industrial Average dow 200 points heading into the afternoon.
Rising borrowing costs and economic uncertainty put a dent in Americans looking to purchase homes in June. The MBA reports that June mortgage applications for new home purchases decreased 12% from a year ago, down 10% monthly from May. The average loan size of new homes declined from $430,855 in May to $426,966 in June. "Higher mortgage rates and heightened economic uncertainty cooled borrower demand in June, leading to new-home purchase applications declining to the lowest level since April 2020," said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.