The mortgage business is in freefall, with mortgage applications down 41% year over year and applications to refinance down more than twice that, by 85.7%, over the same period, the Mortgage Bankers Association said today.
Meanwhile, adjustable-rate mortgage applications rose 25.1% over the past 12 months, the trade group said, but were still down 2.5% last week and down 24.7% for the past four weeks.
Joel Kan, the association’s vice president and deputy chief economist, said rising interest rates are depressing mortgage application activity, which remained at its slowest pace since 1997.
“Mortgage rates increased for the tenth consecutive week [last week], with the 30-year fixed rate reaching 7.16%, the highest rate since 2001,” Kan said. The 30-year fixed-mortgage rate has since edged up to 7.22%.
Last week, purchase applications declined 2% to the slowest pace since 2015, more than 40% behind last year’s pace. he added.
Overall, mortgage applications are down 69.1% from one year ago and down nearly 21% from four weeks ago, the association reported.
Mortgage rates have more than doubled since the beginning of the year, as the Federal Reserve aggressively hikes rates to control stubborn inflation.
Central bankers are expected to hike rates by another 75 basis points, a fourth straight increase, at its next policy meeting on November 1 and 2.
Despite higher rates and lower overall application activity, there was a slight increase in Federal Housing Administration purchase applications last week, mostly because FHA rates are still slightly lower than conventional loan rates, the Mortgage Bankers Association said.
Sales of new U.S. homes tumbled in September, and data from the previous month was revised lower, the Commerce Department reported, as prospective home buyers were edged out of the market by high home prices and mortgage rates not seen in over a decade.
New single-family home purchases fell 10.9% below the revised August rate to a seasonally adjusted annual rate of 603,000 units, the Commerce Department said today.
There was a lot of variation, however, when the department drilled down to regional sales. In the South, for instance, sales tumbled 20.2% to 356,000, while the West saw a drop of just 0.7% to 135,000 in September. In the Northeast, sales practically skyrocketed, rising 56.0% from August to 39,000.
Still, sales plummeted 17.6% nationally year on year in September. U.S. Census data says they peaked at 993,000 units in January 2021, reaching highs they had not seen since 2006.