Mortgage Applications for Purchases Dropped to 28-Year Low Last Week

Mortgage applications for home purchases dropped 5.7% last week to a 28-year low as higher rates deterred homebuyers, according to the Mortgage Bankers Association. 

The purchase Index of the Weekly Mortgage Applications Survey was 44% lower than the same week a year ago. It's close to a three-decade low for a second week.

The Refinance Index also fell by 6% from a week earlier and was 74% lower than the same week a year ago.

The MBA attributed the declines to rising mortgage rates after their winter decline. The average rate for a 30-year fixed-rate loan was 6.71%, compared with 4% a year ago, the MBA said.

"After a brief revival in application activity in January when mortgage rates dropped to 6.2%, there has now been three straight weeks of declines in applications as mortgage rates have jumped 50 basis points over the past month,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.

Consumer worries over inflation and the possibility of a recession are affecting the market across all sectors, according to the MBA. 

“Data on inflation, employment, and economic activity have signaled that inflation may not be cooling as quickly as anticipated, which continues to put upward pressure on rates,” Kan said. 

The average contract interest rate for 30-year fixed-rate mortgages with loan balances of $726,000 or less increased to 6.71% from 6.62%, with points increasing to 0.77 from 0.75 for loans with a 20% down payment. 

The average contract interest rate for 30-year fixed-rate mortgages with loan balances greater than $726,000 remained unchanged at 6.44%, with points decreasing from 0.49 from 0.53 for 80% loan-to-value ratio loans.