Mortgage demand has fallen to the lowest rate in 28 years as interest rates continue to hike and home prices remain high.
Key Details
- Mortgage applications dropped 6% last week compared to the week before, according to the Mortgage Bankers Association’s seasonally adjusted index.
- Volume was 44% lower than the same week one year ago, marking the demand at the closest level in 28 years.
- The average rate for a 30-year fixed rate home loan is now 6.71% ⬆️ from 6.62%a month ago and ⬆️ about 4% in February 2022.
Why it’s news
Mortgage rates are on the rise again, keeping buyers from purchasing houses and sinking mortgage application demand to the lowest level in 28 years.
In early December of 2022, mortgage rates slightly declined, bringing home that the numbers would continue to cool off and open back up the housing market, but the low rates did not last long as the second half of the month brought rising 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. Now rates are continuing to rise, sending demand for mortgage applications down.
Mortgage applications dropped 6% last week compared to the week before, according to the Mortgage Bankers Association’s seasonally adjusted index. Mortgage rates have moved 50 basis points higher in the previous month, while in February of 2022, rates were around 4%, according to CNBC.
“Data on inflation, employment, and economic activity have signaled that inflation may not be cooling as quickly as anticipated, which continues to put upward pressure on rates,” says MBA economist Joel Kan.
Applications to refinance homes are also falling. Refinancing applications also fell 6% and are 74% lower year over year.
The sinking of mortgage demand could indicate a slow season for the housing market as few homebuyers can afford the high-interest rates, and the sector could be slow until rate hikes cool.