Mortgage Applications Drop the Most in Five Months

Rising concerns about inflation lifted borrowing costs last week, denting demand for mortgages

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Bill McColl
Bill McColl
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Bill McColl has 25+ years of experience as a senior producer and writer for TV, radio, and digital media leading teams of anchors, reporters, and editors in creating news broadcasts, covering some of the most notable news stories of the time.

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Published February 22, 2023
U.S. Mortgage Demand Skyrockets As Interest Rates Decline

Scott Olson / Staff / Getty Images

Applications for home loans plunged last week by the most in almost five months as increasing concern about inflation boosted borrowing costs.

The Mortgage Bankers Association’s (MBA) Market Composite Index measuring mortgage application volume tumbled 13.3% from the week before, the largest decline since the end of September. Purchase applications sank 18%, while those to refinance a home were down 2%.

Joel Kan, the MBA’s vice president and deputy chief economist, noted that the average rate on a 30-year, fixed-rate conforming home loan (up to $726,200) was 6.62%, a jump of 23 basis points (bps) from the prior week and the highest it’s been since November.

Inflation and Higher Interest Rates

Kan added that mortgage rates have gone up significantly over the past two weeks as economic data showed “inflation cooling at a slower pace than expected,” raising concerns about more Fed monetary tightening to try to bring down prices.  

He said application activity normally picks up at this time of year. However, increased borrowing costs have “put many homebuyers back on the sidelines once again.” Kan explained that’s especially true for those looking to purchase their first home since they are “more sensitive to affordability challenges and the impact of higher rates.”

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  1. Mortgage Bankers Association (MBA). "Mortgage Applications Decrease in Latest MBA Weekly Survey."

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