New York City co-op boards thinking about refinancing their underlying mortgages aren’t the only ones keeping an eye on interest rates. Mortgage applications from potential homebuyers nationwide have fallen to a four-year low, Bloomberg reports, in response to interest rates that have been rising since 2015 and are now at their highest level since 2010 – with more rises on the horizon.
The Mortgage Bankers Association’s market composite index fell 4 percent in the week ending Nov. 2 to 316.2, the lowest reading since December 2014, according to a report Wednesday from the Washington-based group. The survey’s contract rate on a 30-year fixed loan rose to 5.15 percent from 5.11 percent.
In New York City, where luxury condo apartments are in a protracted sales slump, the rising interest rates and declining mortgage applications threaten to spread the pain to all levels of co-op and condo apartment sales. The data signal higher mortgage costs are an ever-growing headwind for homebuyers both in New York and the rest of the country, who are already facing a dearth of affordable listings.
Higher borrowing costs have come as the Federal Reserve raised interest rates eight times since December 2015. Mortgage rates and commercial borrowing costs are expected to keep climbing. Federal Reserve Chairman Jerome Powell has been raising the benchmark borrowing rate to curb inflation and prevent an expanding economy from overheating. Another hike is expected in December.
Meanwhile, the declining demand for mortgages is sending ripples through the banking industry’s mortgage departments. Wells Fargo laid off 600 workers in August and JPMorgan laid off 400 employees nationwide last month, the Real Deal reports.
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