WASHINGTON–Higher interest rates and broader economic concerns led to a sharp drop in demand for new mortgages.
Last week, total mortgage application volume fell 12.7% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, increased to 6.90% from 6.81%, with points rising to 0.66 from 0.62, including the origination fee, for loans with a 20% down payment. While that is the highest rate in two months it is still 34 basis points lower than the same week one year ago.
Rates are up almost 30 basis points in just two weeks, the new MBA data show.
What Data Show
The MBA further reported:
- Refinancing applications dropped 20% for the week but were 43% higher than the same week one year ago. The refinance share of mortgage activity decreased to 37.3% of total applications from 41.3% the previous week.
- Applications for a mortgage to purchase a home fell 7% for the week and were just 6% higher year over year.
‘Uncertainty’ a Driver
“Similar to the previous week, economic uncertainty and rate volatility impacted prospective homebuyers,” said Joel Kan, vice president and deputy chief economist at the MBA.
