<mediadc-video-embed data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1654698597705,"cms.content.publishUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1654698597705,"cms.content.updateUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"rawHtml":"
var _bp = _bp||[]; _bp.push({ "div": "Brid_54698590", "obj": {"id":"27789","width":"16","height":"9","video":"1027584"} }); ","_id":"00000181-43b8-dedf-ad93-dffbd4f60000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedDemand for mortgages has hit its lowest level in 22 years, according to a report from the Mortgage Bankers Association.
Mortgage loan application volume decreased by 6.5% last week when compared to the week before. The volume of refinances dropped by 6% during that same time and is 75% lower than this time last year, according to the group’s research.
Mortgage rates are also rising once again after a few weeks of decline. As of Wednesday, the average 30-year fixed-rate mortgage was up more than 2 percentage points from just a year before. The higher rates are making housing less affordable.
“Weakness in both purchase and refinance applications pushed the market index down to its lowest level in 22 years. The 30-year fixed-rate increased to 5.4% after three consecutive declines. While rates were still lower than they were four weeks ago, they remain high enough to still suppress refinance activity,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
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Applications for a mortgage to buy a home decreased by 7% last week and were 21% lower than the same week last year.
“The purchase market has suffered from persistently low housing inventory and the jump in mortgage rates over the past months. These worsening affordability challenges have been particularly hard on prospective first-time buyers,” said Kan.
Home prices increased by a record 20.6% in the 12 months ending in March, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Indexes, even despite inflation and higher mortgage rates affecting affordability.
Real estate brokerage Redfin announced late last month that nearly 1 in 5 home sellers, more than 19%, dropped prices for the month ending on May 22. That marks the highest rate since October 2019, the study found.
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The Federal Reserve is facing the challenging task of hiking interest rates to bring down inflation while trying not to dampen the economy so much that it falls into a recession.
While there are some indications that the wave of higher prices may have crested, it is still expected to take months or years for inflation to fall back down to the 2% annual level that the Fed is pushing for.
