Application activity reaches new low.
“Mortgage applications are now into their fourth month of declines, dropping to the lowest level since 1997,” said Joel Kan, deputy chief economist of the Mortgage Banker Association (MBA).
Overall mortgage application volume fell 4.5% on a seasonally adjusted basis from one week earlier. The increase comes as long-term mortgage rates hit their highest level in 20 years, according to Kan.
“The speed and level to which rates have climbed this year have greatly reduced refinance activity and exacerbated existing affordability challenges in the purchase market,” he added. “Residential housing activity ranging from new housing starts to home sales have been on downward trends coinciding with the rise in rates.”
Refinance applications posted a 7% week-over-week decline, and purchase activity was down 4% from a week ago. Year over year, refi and purchase application volumes were down 86% and 38% over the year, respectively.
Of total applications, the refinance share of mortgage activity dropped seven basis points to 28.3% week over week. Meanwhile, the adjustable-rate mortgage share of activity increased to 12.8%, and the portion of FHA loans rose to 13.6%.
“With rates at these high levels, the ARM share rose to 12.8% of all applications, which was the highest share since March 2008. ARM loans continue to remain a viable option for borrowers who are still trying to find ways to reduce their monthly payments,” Kan said.