Due to rising interest rates and record high inflation, total mortgage application volume was 52.7% lower last week than the same week last year, according to the Mortgage Bankers Association’s (MBA) seasonally adjusted index.
The MBA found that “Mortgage applications in the US increased 6.6% in the week ended June 10th, the first increase in five weeks, but were 52.7% lower than a year earlier. The purchase index jumped 8.1% and the refinancing 3.7%. Meanwhile, the average contract rate on a 30-year fixed-rate mortgage rose by 25 basis points to 5.65%, the highest level since late 2008.”
“Mortgage rates followed Treasury yields up in response to higher-than-expected inflation and anticipation that the Federal Reserve will need to raise rates at a faster pace,” said Joel Kan, associate vice president of economic and industry forecasting at the MBA.
“Despite the increase in rates, application activity rebounded following the Memorial Day holiday week but remained 0.29 percent below pre-holiday levels,” Kan added.
Last week’s increase came after the total mortgage application volume reached its lowest level in 22 years.
“The purchase market has suffered from persistently low housing inventory and the jump in mortgage rates over the past two months,” Kan said last week. “These worsening affordability challenges have been particularly hard on prospective first-time buyers.”
As noted by The Wall Street Journal, a median American household needed 38.6% of its income to cover payments on a median-priced home in March. The figure is an increase from 32.6% at the end of 2021 and the highest level since August 2007.
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