Lending rates have continued to soar off the back of Federal Reserve chairman Ben Bernanke's comments last week, hitting a two-year high.
Rates on 30-year fixed mortgages averaged 4.46% this week, according to data from Freddie Mac. This is an uptick from 3.93% last week.
At the same time mortgage applications fell 3% week-over-week, according to the Mortgage Bankers Association. Refinancing also fell to itslowest since 2011, as well. Purchases rose, however, up 2% year-on-year.
The rise in rates is due to impact originators, a branch manager has claimed.
"Rates have gone up about 1% since May, which is really the main issue for all of us right now,” said Chad Melin, branch manager for Academy Mortgage in Maricopa, Arizona.
The rise has affected conventional loan affordability, he said. Higher rates along with FHA
changes, such as MIP increases and cancellation policy changes, will dramatically affect originations going forward, Melin posited.
But Freddie Mac vice president and chief economist Frank Nothaft painted a more optimistic picture. While he conceded higher rates would have an impact, he claimed it would be offset by housing affordability.
"Higher mortgage rates may dampen some housing market activity but the effect will be muted by the high level of buyer affordability, and home sales should remain strong. For instance, existing home sales in May rose to its strongest pace since November 2009 and new home sales were the most seen since July 2008. In addition, the 12-month growth in the S&P/Case-Shiller® 20-city home price index for April of 12.1 percent was the largest since April 2006."