Overall application activity plummets
Mortgage application volume has plunged to its lowest level since December 1996, according to the Mortgage Bankers Association (MBA).
MBA’s Market Composite Index, a measure of home loan activity, fell 2.9% on a seasonally adjusted basis and down 5% on an unadjusted basis from the week before. The index declined to a 27-year low despite a 10-basis-point decline in the average contract interest rate for 30-year fixed-rate mortgages.
“The 30-year fixed mortgage rate decreased to 7.21% last week, but rates remained more than a full percentage point higher than a year ago, despite mixed data on the health of the economy and signs of a cooling job market,” said MBA deputy chief economist Joel Kan. “The refinance index dropped to its lowest level since January 2023, driven by a 6% decline in conventional refinances.”
Both refinance and purchase applications edged down 5% week over week, with the purchase index hitting the lowest level in 28 years as low inventory and high mortgage rates continue to keep potential buyers on the sidelines.
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“There remains pent-up demand in the housing market, but with mortgage rates near 7%, consumers are feeling the pinch of declining affordability,” explained Odeta Kushi, deputy chief economist of First American. “However, demographic tailwinds from millennials aging into their prime home-buying years and a lack of existing-home inventory mean new home construction is essential in meeting shelter demand.”
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