At the end of 2022, climbing mortgage rates resulted in dropped demand for mortgage loan applications.
- Mortgage applications dropped 13.2% last week compared to demand from just two weeks before.
- Average interest rates reached 6.58% by the end of December 2022 compared to rates of 3.33% at the end of 2021.
- Refinancing demand also dropped during December. Compared to December 2021, demand dropped 87%.
Why it’s news
The beginning of December saw a slight decline in mortgage interest rates. However, the second half of the month resulted in climbing rates after another Federal Reserve interest rate hike.
Mortgage applications dropped 13.2% in the second half of December compared to just two weeks previously.
While mortgage rates are lower than the market’s highs in October, the rates are still at an unattainable high for many potential buyers. The continuing high rates mean that there will likely be little refinancing activity until mortgage rates drop significantly.
Listing prices for homes have begun to decline compared to last year’s buying frenzy, but high mortgage rates mean the reduced prices have little effect.
“Purchase applications have been impacted by slowing home sales in both the new and existing segments of the market. Even as home-price growth slows in many parts of the country, elevated mortgage rates continue to put a strain on affordability and are keeping prospective homebuyers out of the market,” Mortgage Bankers Association economist Joel Kan says.