Business

Mortgage demand falls to lowest level in 22 years

The pain in the mortgage market is only getting worse as higher interest rates and inflation hit US consumers.

Demand for mortgages fell more than 6% last week from the previous week, hitting its lowest level since 2000, according to the Mortgage Bankers Association’s seasonally adjusted index.

Mortgage applications to buy a home fell 7% in a week and were 19% lower than the same week in 2021. lost significant purchasing power.

“Buying activity for both conventional and government loans has declined as a deteriorating economic outlook, high inflation and ongoing affordability issues weigh on consumer demand,” said MBA economist Joel Kahn.

While buyers are less exposed to weekly interest rate changes, the larger picture of rate hikes has already taken its toll. Mortgage rates rose again last week after falling slightly over the past three weeks.

The average contractual interest rate for 30-year fixed-rate mortgages with a qualifying loan balance ($647,200 or less) increased to 5.82% from 5.74%, with the interest rate increasing to 0.65 from 0. 59 (including issuance fee) for loans with 20% down. payment. This figure was 3.11% in the same week a year ago.

Demand for refinancing, which is highly sensitive to interest rates, fell 4% in a week and was 80% lower than in the same week last year. These applications are also at a 22-year low, but a drop in demand from home buyers has led to an increase in the share of refinancing mortgage activity to 31.4% of total applications from 30.8% the previous week.

Mortgage interest rates haven’t changed much this week, but that could change very soon due to rising bond market volatility. The Federal Reserve is expected to raise rates by another 75 basis points next week, and other central banks will take similar action against inflation. The basis point is 0.01%.

“This is especially true next week as markets digest the Fed’s latest policy announcement next Wednesday, but Thursday’s European Central Bank policy announcement could also generate enough turmoil to affect US rates,” Graham said. , COO of Mortgage News. Daily.


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button