Mortgage demand falls to lowest level since 1995 as interest rates approach 8%
Mortgage rates rose last week for the sixth week in a row, causing demand for home loans to fall to the lowest level since 1995.
Total application volume fell 6.9% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) rose to 7.70% from 7.67% and points decreased to 0.71 from 0.75 (including origination fee) for loans with a 20% down payment. %. . This is the highest rate since November 2000. The rate was 6.94% during the same week one year ago.
Mortgage applications to purchase a home were down 6% week to week and were 21% lower than the same week one year ago.
Home loan refinancing applications fell 10% during the week and were 12% lower than a year ago.
“Purchase and refinance applications declined, driven by significant declines in traditional applications,” Joel Kahn, vice president and deputy chief economist at MBA, said in a statement. The share of adjustable-rate mortgages (ARMs) reached 9.3%, the highest share in 11 months, he added.
ARMs offer lower rates and can be locked in for up to 10 years before the rate resets. More borrowers are turning to these loan products to gain purchasing power, as interest rates and house prices rise.
Mortgage rates rose to start this week, with the 30-year fixed rate hitting 7.92% on Tuesday, according to Mortgage News Daily. This is a cyclical rise. This increase was a result of the monthly retail sales report, which was much stronger than expected.