The housing market is seeing some big changes. Buyers are starting to look at riskier loans. This is happening because interest rates are going up. Last week, mortgage rates hit their highest point since February 2023. This jump in rates has made some buyers think twice. But others are turning to loans that might not be the safest bet.

The number of people applying for mortgages dropped by 8. 5% last week. This is according to the Mortgage Bankers Association. The average rate for a 30-year fixed mortgage went up to 6. 81% from 6. 61%. Even with this increase, the points needed for these loans went down a bit. This means buyers are looking for ways to make their monthly payments smaller.

Buyers are not the only ones feeling the pinch. Sellers are also facing a tough market. There are 30% more homes for sale now than there were last year. This might seem like good news for buyers. But it also means there is more competition. Buyers might have more choices. But they also have to deal with higher prices and riskier loans.

Some buyers are turning to adjustable-rate mortgages, or ARMs. These loans start with a lower interest rate. But they can go up after a few years. This makes them riskier. But for some buyers, the lower initial rate is worth the risk. The share of ARMs jumped to 9. 6%. This is the highest it has been since November 2023. Almost a quarter of all loan applications last week were for ARMs. This shows that buyers with bigger loans are also taking on more risk.

Refinancing is also seeing some changes. The number of people applying to refinance their homes dropped by 12%. But it is still 68% higher than it was last year. This is because rates were higher at this time last year. The market is still volatile. Experts warn that rates could go up again. Buyers and sellers need to be ready for more changes. The housing market is always changing. But right now, it is more unpredictable than ever. Buyers and sellers need to be smart and careful. They need to think about the risks and the rewards.

Housing Market Shifts: Buyers Take Risks as Rates Rise

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