Key facts
- Thirty-year mortgage rates rose to 6.603% this week, up from 6.449% last week.
- Rising oil prices, influenced by the war in Iran, have pushed Treasury yields higher.
- Mortgage applications across all loan types declined by 10.5% week-over-week.
- Refinance applications fell 15% due to diminishing incentives.
- Home inventory was at a 3.8-month supply in February, indicating a seller's market.
- Homes spent an average of 66 days on the market in February, a slowdown from previous periods.
Thirty-year mortgage rates have climbed to 6.603% this week, an increase from 6.449% the prior week, according to U.S. News data. This rise reverses a downward trend seen in the first two months of the year, with the war in Iran and subsequent spike in oil prices pushing Treasury yields higher.
Joel Kan, MBA’s vice president and deputy chief economist, stated that the threat of sustained high oil prices kept Treasury yields elevated, leading to higher mortgage rates. This environment has diminished refinance incentives, contributing to a 15% drop in refinance applications and an overall 10.5% decrease in mortgage applications across all loan types for the week ending March 20.
Purchase applications also saw a decline as higher mortgage rates, affordability constraints, and economic uncertainty deterred potential buyers. Redfin senior economist Asad Khan noted that while rates briefly dipped below 6%, they have since rebounded, adding to buyer nervousness.
Despite a limited housing inventory of 3.8 months in February, which typically favors sellers, the market is seeing more sellers than buyers. This dynamic allows buyers to proceed cautiously. Homes are taking longer to sell, with the typical home spending 66 days on the market in February, the slowest pace for that month since 2016. Furthermore, more home-sale contracts are falling through, with over 42,000 agreements abandoned in February, representing 13.7% of contracts signed.