By Kristin Myers, Editor-in-Chief

ICYMI: Mortgage Applications Drop as Homebuying Interest Falls

In case you missed it, the number of people applying for a mortgage dropped—again. An index of mortgage applications dropped 0.8%, while a purchasing index dropped 3% since last week, and is 23% lower than last year, the latest data from the Mortgage Bankers Association (MBA) shows.

The declines come as mortgage rates have started to move upwards again, with the average rate on a 30-year fixed-rate mortgage soaring to 5.9%, according to Freddie Mac . The higher interest rates have been weighing on application interest to refinance home loans as well. The MBA's index of refinancing applications sank 83% from last year after dropping a further 1% since last week.

If you have a home to sell, you could find it more difficult to find an interested buyer willing to pay high prices for a home and more in interest for the mortgage. If you're a prospective homebuyer, power could also be finally starting to shift in your favor. While you shouldn't expect that home prices will crash, higher rates do weigh on housing prices, while the declining interest might reduce the amount of competition you'll face when trying to snag your home sweet home.

And don't forget—if the Federal Reserve hikes interest rates again this month (as it's expected to), those home loans will only get more expensive. So you might want to secure your rate now before it only goes higher.

-Kristin

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Term of the Day

Mortgage Recast

A mortgage recast is when a borrower makes a large, lump-sum payment toward the principal of their mortgage, resulting in a loan reduction that reflects the new balance.

While both a mortgage recast and mortgage refinance can save you money on your mortgage, they're not the same. With recasting, you pay a significant amount of your loan balance so your lender can lower your monthly payments.

If you decide to refinance, you'll replace your current loan with a new one. Depending on the interest rate you land and your financial situation, refinancing might allow you to lower your monthly payments, reduce the amount you pay in interest, pay off your mortgage faster, and use your equity to access cash as needed.

Off the Charts

The average rate on a 30-year fixed-rate mortgage recently soared to 5.9%, according to Freddie Mac. However, mortgage giant Fannie Mae predicts that by 2023, the average rate offered for a 30-year fixed rate mortgage could drop to 4.50% from its 5.20% average in the second quarter of 2022.