Mortgage application volume decreased 4.2% during the week ended August 18, as the average rate for a 30-year fixed-rate mortgage climbed to 7.31%, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances decreased 3% from the previous week and were down 35% compared with the same week one year ago.
Applications for purchases decreased 5% compared with the previous week and were down 30% compared with a year earlier.
“Treasury yields continued to spike last week as markets grappled with illiquidity and concerns that the resilient economy will keep inflation stubbornly high,” says Joel Kan, vice president and deputy chief economist for the MBA, in a statement. “This spike pushed mortgage rates higher last week, with the 30-year fixed rate increasing to 7.31 percent – the highest level since December 2000.“
“Applications for home purchase mortgages dropped to their lowest level since April 1995, as homebuyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power,” Kan says. “Low housing supply is also keeping home prices high in many markets, adding to the affordability hurdles buyers are facing.”
The refinance share of mortgage activity increased to 29.5% of total applications, up from 28.6% the previous week.
The adjustable-rate mortgage (ARM) share of activity increased to 7.6% of total applications.
“The ARM share of applications increased to 7.6 percent, the highest level in five months, and the number of ARM applications picked up by 4 percent last week,” Kan says. “Some homebuyers are looking to lower their monthly payments by accepting some interest rate risk after the initial fixed period.”
Photo: Scott Graham