Borrowers stay on the sideline as housing gets less affordable.
Mortgage applications remained virtually unchanged for the week ending November 4, with both refinance and purchase applications hovering at record lows.
Home loan application volume edged down 0.1% on a seasonally adjusted basis from the prior week, according to the Mortgage Bankers Association (MBA). On an unadjusted basis, total applications dropped 2% week over week.
MBA’s seasonally adjusted purchase index increased by 1%, while the refinance index fell 4% from the previous week. Compared to the same period a year ago, purchase applications were down by 41%, and refi applications were 87% lower than last year’s levels.
“Purchase applications increased for the first time after six weeks of declines but remained close to 2015 lows, as homebuyers remained sidelined by higher rates and ongoing economic uncertainty,” said Joel Kan, MBA’s deputy chief economist. “Refinances continued to fall, with the index hitting its lowest level since August 2000.”
The refinance share of mortgage activity decreased five basis points to 28.1% of total applications, while the adjustable-rate mortgage share of activity increased to 12%.
Demand for mortgage loans continued to wane as mortgage rates climbed higher. MBA reported Wednesday that the contract rate on a 30-year fixed-rate mortgage spiked to 7.14%.
“Mortgage rates edged higher last week following news that the Federal Reserve will continue raising short-term rates to combat high inflation,” Kan said. “The 30-year fixed rate remained above 7% for the third consecutive week, and there were increases for most other loan types.”