Mortgage rates rose to an eight-month high in October, which drove a significant decline in refinancing activity. But home purchase demand saw a much smaller dip, and we expect it will trend down only gradually as mortgage rates rise to around 3.5% by end-2021. After a period of stability, the average size of home purchase mortgages increased to $411,000 in October. That reflects a dwindling share of first-time buyers in the market and therefore doesn’t point to another surge in house price growth.
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