In addition to higher mortgage rates, MBA said prospective buyers still weighed down by hefty home prices
Mortgage applications declined once again as the inflation-driven increase in mortgage rates discouraged prospective homebuyers.
Figures released by the Mortgage Bankers Association showed that overall home loan applications fell 5.4% for the week ending February 11. The previous week, mortgage application volume was down by 7.1%.
“Mortgage rates increased across the board last week following the recent rise in Treasury yields, which have moved higher due to unrelenting inflationary pressures and increased market expectations of more aggressive policy moves by the Federal Reserve,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The 30-year fixed-rate saw the largest single-week increase since March 2020 and was above the 4% mark for the first time since 2019.”
Read more: Inflation hits 40-year high – what does that mean for mortgage rates?
Week over week, MBA’s refinance index decreased 9%, and the seasonally adjusted purchase index dipped 1%. However, purchase applications were up by 5% on an unadjusted basis.
“Consistent with this period of higher mortgage rates, refinance applications fell 9% last week and stood at around half of last year’s pace. The refinance share of applications was also at its lowest level since July 2019,” Kan said. “Purchase applications saw a modest decline over the week, with government purchase applications accounting for most of the decrease.”
Of total applications, the refi share of mortgage activity declined from 56.2% to 52.8%, while the adjustable-rate mortgage (ARM) share of activity grew to 5%.
“Prospective buyers still face elevated sales prices in addition to higher mortgage rates. The heavier mix of conventional applications again contributed to another record average loan size at $453,000,” Kan said.
