A key measure of home-purchase applications slumped last week amid a sharp increase in mortgage rates.
The Mortgage Bankers Association’s (MBA) index of mortgage applications fell 2.3% for the week ended Feb. 9, compared with the previous week, according to new data published Wednesday.
The data also showed that the average rate on the popular 30-year loan rose to 6.87%. While that is down from a peak of 8% in October, it marks the highest level for interest rates since December 2023.
“Application activity was weaker last week, as mortgage rates moved higher across the board,” said Joel Kan, MBA’s deputy chief economist.
MORTGAGE CALCULATOR: SEE HOW MUCH HIGHER RATES COULD COST YOU
Homes in Hercules, California, on Dec. 26, 2023. Photographer: David Paul Morris/Bloomberg via Getty Images
Housing demand has stalled out as rates move higher. Applications for a mortgage to purchase a home dropped 3% from the previous week. Application volume is down 12% compared with the same time last year.
READ ON THE FOX BUSINESS APP
Demand for refinancing also fell last week, declining 2% from the previous two weeks, according to the survey. Compared with the same time last year, refinance applications are up about 12%.
“Purchase applications remained subdued as elevated rates continue to add to affordability challenges along with still-low existing housing inventory,” Kan said. “Refinance applications declined and remained depressed, with rates still higher than a year ago.”
CREDIT CARD DEBT SMASHED ANOTHER RECORD HIGH AT THE END OF 2023
The interest rate-sensitive housing market has cooled rapidly in the wake of the Federal Reserve’s aggressive tightening campaign. Policymakers lifted the benchmark federal funds rate 11 times over the course of 16 meetings in an attempt to crush stubborn inflation and slow the economy.
Officials signaled during their most recent policy-setting meeting in January that they are done raising interest rates – but are not quite ready to pivot to cutting them yet. Investors had previously penciled in a series of aggressive rate reductions beginning as early as March. Now, most economists expect the cuts to begin in May or June.
A sign outside a home for sale in Atlanta on Sept. 6, 2023. Photographer: Elijah Nouvelage/Bloomberg via Getty Images
Higher mortgage rates are not only dampening consumer demand, but they are limiting inventory. That is because sellers who locked in a low mortgage rate before the pandemic have been reluctant to sell with rates continuing to hover near a two-decade high, leaving few options for eager would-be buyers.
Available home supply remains down a stunning 34.3% from the typical amount before the COVID-19 pandemic began in early 2020, according to a separate report published by Realtor.com.
Original article source: Mortgage demand tumbles as interest rates rise to highest level since December
News Related-
Russian court extends detention of Wall Street Journal reporter Gershkovich until end of January
-
Russian court extends detention of Wall Street Journal reporter Evan Gershkovich, arrested on espionage charges
-
Israel's economy recovered from previous wars with Hamas, but this one might go longer, hit harder
-
Stock market today: Asian shares mixed ahead of US consumer confidence and price data
-
EXCLUSIVE: ‘Sister Wives' star Christine Brown says her kids' happy marriages inspired her leave Kody Brown
-
NBA fans roast Clippers for losing to Nuggets without Jokic, Murray, Gordon
-
Panthers-Senators brawl ends in 10-minute penalty for all players on ice
-
CNBC Daily Open: Is record Black Friday sales spike a false dawn?
-
Freed Israeli hostage describes deteriorating conditions while being held by Hamas
-
High stakes and glitz mark the vote in Paris for the 2030 World Expo host
-
Biden’s unworkable nursing rule will harm seniors
-
Jalen Hurts: We did what we needed to do when it mattered the most
-
LeBron James takes NBA all-time minutes lead in career-worst loss
-
Vikings' Kevin O'Connell to evaluate Josh Dobbs, path forward at QB