Mortgage applications decrease amid high rates

Economist notes mortgage rates are at a 20-year high.

?The Market Composite Index, a measure of mortgage loan application volume, decreased by 1.3% on a seasonally adjusted basis from a week earlier, according to new data from the Mortgage Bankers Association (MBA).

The composite index, on an unadjusted basis, decreased 2% compared to a week before. The refinance index decreased by 1% from a prior week. The seasonally adjusted purchase index also went down by 2% from a week earlier. The unadjusted purchase index decreased 2% compared to the previous week.

MBA noted all these results emerged amid elevated mortgage rates, which have been described as being at their 20-year high.

“Mortgage rates moved to their highest levels in over 20 years as Treasury yields increased late last week,” said Joel Kan, vice president and deputy chief economist at the MBA. “The 30-year fixed mortgage rate increased to 7.41%, the highest rate since December 2000, and the 30-year fixed jumbo mortgage rate increased to 7.34%, the highest rate in the history of the jumbo rate series dating back to 2011.”

Kan said mortgage rates are expected to remain high for a good while yet. Consequently, overall applications have dipped with homeowners and prospective homebuyers growing reluctant.

“The purchase market, which is still facing limited for-sale inventory and eroded purchasing power, saw applications down over the week and 27% behind last year’s pace. Refinance activity was down over 20% from last year and accounted for approximately one third of applications. Many homeowners have little incentive to refinance,” said Kan.
Other highlights of the report:
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• FHA applications decreased to 14.1% from 14.2%.
• VA applications inched down slightly to 10.9% from prior week’s 11%.
• USDA applications slightly increased to 0.5%.
• The refinance share of mortgage activity increased slightly to 31.9%.
• Adjustable-rate mortgage (ARM) activity share rose to 7.5%.

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