Homebuyers have less and less incentives to get a home
Down for the seventh straight week, mortgage application volume hit its lowest level in 27 years – reflecting the high-interest rate environment keeping potential homebuyers on the sideline.
The Mortgage Bankers Association reported today that mortgage applications dropped 0.8% on a seasonally adjusted basis, and down 12% when unadjusted.
The overall volume was dragged down by a 5% decline in refinance applications, the weakest reading since January, according to MBA deputy chief economist Joel Kan. The refi share of total applications edged down nine basis points to 29.1% during the week ending September 8.
Meanwhile, the seasonally adjusted purchase application index increased 1% week over week. On an unadjusted basis, however, purchase activity fell 11% from the previous week and was down 27% from a year ago.
“The 30-year fixed mortgage rate increased to 7.27% last week and was 40 basis points higher than where it was in late July,” Kan said. “Purchase applications increased over the week despite the increase in rates, pushed higher by a 2% gain in conventional loans. Given how high rates are right now, there continues to be minimal refinance activity and a reduced incentive for homeowners to sell and buy a new home at a higher rate.”
According to a recent Fannie Mae report, most renters and homeowners believe it’s a bad time to buy a home due to strained housing affordability.
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