Rates on the rise, while lock volume declines
After last week’s quick break from rising rates, we’re back to our regularly scheduled programming as we begin to see rates tick back up. New numbers on Tuesday, October 11, 2022, showed a 0.25% increase on the average rate for a 30-year fixed rate mortgage—coming in at 7.10%. Meanwhile, lock volumes were down 10% from August and 60% from last year. This is due in large part to a 26.2% drop in cash-out refinance locks from the month prior, which is 78% lower than the same time last year. While record-low rates drove record-high refinancing numbers, recent data shows 90% of all active first-lien mortgages have current rates below 5%, leaving little room for homeowners interested in refinancing and driving September’s new refinance share low of 16%.
The credit availability concern
After falling for the seventh consecutive month in September, mortgage credit availability hit its lowest level since March of 2013. That means there are fewer potential homebuyers who are able to qualify for a mortgage.
As the Federal Reserve continues to increase rates to combat high inflation, economists predict a potential recession, leaving lenders concerned that a weaker economy could lead to more people defaulting on their mortgages. This combination of higher rates and harder-to-qualify-for loans has some homebuyers retreating to the sidelines.
The fight against inflation
Last month, the Fed raised benchmark interest rates in reaction to rising inflation, while indicating rate hikes would continue above the current 3% to 3.25% range. Experts warn that while this can help to tame inflation, these higher rates also have the potential to increase the chance of recessions in wealthy nations and debt crises in poorer ones.
The International Monetary Fund previously predicted the global economy would grow 3.2% in 2023, but now anticipates that to slow to 2.7%, explaining they expect a third of the global economy to be in a “technical recession” (defined as an economy that declines for two consecutive quarters).
Pre-Approval
in 10 minutes?
in under 10 minutes. Grab a few important documents to get started.
- Tax Returns
- Copies of W-2s (or 1099s for independent contractors,
freelancers and the self-employed) - A payroll stub
- A bank statement
- Loan obligation info (student loans,
auto loans and credit cards)
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply.
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Guaranteed Rate does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error-free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Guaranteed Rate. Guaranteed Rate its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.
