Mortgage applications slipped again as rates stayed put in the high 6%s, keeping affordability at the forefront of buyers’ minds.
The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index — a measure of mortgage loan application volume — decreased by 0.6%, following the week prior’s 0.7% slip.
Adjusted purchase applications slipped by 0.1%, while the unadjusted index was up 1% and 13% lower YOY.
Rates pulled back slightly, clocking in at 6.91% and the 15-year fixed rate fell to its lowest level in two months, 6.35%. But both are high enough to deter borrowers, according to MBA Vice President and Deputy Chief Economist Joel Kan.
“Elevated mortgage rates continued to weigh down on home buying. Purchase applications were unchanged overall, although FHA purchases did pick up slightly over the week.”
In the current rate environment, trading up to a 25% more expensive home would more than double the average mortgage holder’s monthly payment. Even moving to a similarly-priced home in the same neighborhood would increase principal and interest payments by 40%.
Those figures are even steeper for homeowners who bought when rates were at record lows during 2020 and 2021.
Soaring home prices cause even more affordability issues for buyers. There are 550 cities where the typical home value is $1 million or more, up from 491 last year, as dwindling listings force prices higher.
Jeremy SickLick of HouseCanary anticipates a slow spring homebuying season as a result of these pressures.
“With rates and home prices continuing to rise, we expect a quieter spring buying season to continue throughout the months ahead,” he said.
Refinances were down 2% from the previous week and 5% YOY. They accounted for 30.3% of applications, historically low. In the past decade, they averaged 58% of all activity.
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