Mortgage demand fell for the fourth week in a row with application demand down 6.3% for the week, according to the Mortgage Bankers Association weekly survey…(MBA)
- REFIS: The Refinance Index continues to take the brunt of the decline with a 10% drop for the week, the index is now down 61% when compared to the same time last year.
- PURCHASES: The Purchase Index is holding on with a 3% drop for the week, the index is only down 9% when compared to the same time last year.
NOTE: Refis now only make up 38.8% of all applications down significantly from the high of 76.5% in March 2020.
Putting downward pressure on mortgage demand is the historic rise in mortgage rates which are getting closer to 5% every week…
- 30-YR FIXED: The average contract interest rate was up 10 basis points to 4.90%, this is a whopping 154 basis points higher than one year ago.
- 15-YR FIXED: The average contract interest rate was up 10 basis points to 4.11%, this is up 137 basis points from the same time one year ago,
Joel Kan, an MBA economist, said it’s all about the rates, rates, rates…
- “Mortgage application volume continues to decline due to rapidly rising mortgage rates, as financial markets expect significantly tighter monetary policy in the coming months…As higher rates reduce the incentive to refinance, application volume dropped to its lowest level since the spring of 2019.”
Rates, of course, are impacting mortgage demand. However, the resilience of the purchase market is impressive. Even with rates on the edge of 5% and inventory at historic lows purchase demand is only down 9% year-over-year. That number is likely to climb as rates price more wannabe home buyers out of the market and the numbers get compared to the start of last year’s hot summer market. However, the fact that purchase demand hasn’t collapsed is more evidence that the housing market is on solid footing.