- Mortgage applications and refinancing volume sank to 22-year lows, the Mortgage Bankers Association said.
- The MBA cited the weakening economic outlook, high inflation, and ongoing affordability issues.
- It’s a rough year for the housing market, with 30-year fixed mortgage rates nearly doubling since January.
Mortgage applications sank to a 22-year low, falling 6.3% last week as inflation fears grip the housing sector, the Mortgage Bankers Association said Wednesday.
That makes three consecutive weeks of declines for mortgage demand, MBA economic forecaster Joel Kan said in a statement, reflecting more challenges ahead for the housing sector.
“Purchase activity declined for both conventional and government loans, as the weakening economic outlook, high inflation, and persistent affordability challenges are impacting buyer demand,” he said. “The decline in recent purchase applications aligns with slower homebuilding activity due to reduced buyer traffic and ongoing building material shortages and higher costs.”
Mortgage refinancing has also hit its lowest levels since 2000, with the MBA’s Refinance Index falling 4% in the past week and plummeting 80% in the past year.
The housing market has been suffering from higher borrowing costs, with mortgage rates doubling from 3% in January to nearly 6% for 30-year fixed rate mortgages. Last week alone saw a 6-percentage-point surge in 30-year fixed rates.
The latest surge likely stemmed from the recent release of the June inflation reading: prices rose 9.1%, leading investors to price in another 75-point-rate hike by the Federal Reserve with potential with a full-point increase possibly on the table as well.