Investors anticipate the Fed raising its federal funds rate from its current target range of between 0.25 percent and 0.5 percent to 2.5 percent -2.75 percent by the end of 2022.
In the week ending April 8, the average contract rate for a 30-year fixed-rate mortgage jumped to 5.13 percent from 4.90 percent the previous week. Since the beginning of the year, it has increased by more than 1.5 percentage points as a result of the Federal Reserve starting to tighten financial conditions in an effort to reduce demand in the economy and lower inflation.
After raising the benchmark overnight lending rate last month for the first time in three years, Fed policymakers now expect a series of fast interest rate increases until at least the end of this year as they work to reduce inflation.
Investors anticipate the Fed raising its federal funds rate from its current target range of between 0.25 percent and 0.5 percent to 2.5 percent -2.75 percent by the end of 2022.
Homebuyers scrambled to lock in rates last week before they rose even further due to the rise in borrowing prices, which has generally decreased demand for mortgage applications since the beginning of the year.
The MBA reported that its Purchase Composite Index, which tracks all mortgage loan applications for single-family homes, rose 1.4 percent on a seasonally adjusted basis to 261.8, while the Refinance Index dropped 4.9 percent.
Mortgage originations are expected to fall 35.5 percent from a year earlier to $2.58 trillion in 2022, according to the MBA's most recent economic prediction, which was also made public on Wednesday.
However, purchase originations are still anticipated to rise, climbing 4% from last year to a record $1.72 trillion in 2022.
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