Applications Slip As Rates Tick Up

Mortgage applications slipped after a weeks-long upward rally as rates ticked up.

The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index — a measure of mortgage loan application volume — fell by 5.7%, reversing last week’s gains.

Adjusted purchase applications declined by 1%, while the unadjusted index was down 3% and 10% lower YOY.

Overall activity is now at its lowest level since early March.

Mortgage rates rose for the first time in four weeks, with the 30-year fixed-rate reaching 7.05%. All other loan types experienced rate increases.

“The uptick in rates led to a decline in mortgage applications heading into Memorial Day weekend,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.

“Borrowers remain sensitive to small increases in rates, impacting the refinance market and keeping purchase applications below last year’s levels. There continues to be limited levels of existing homes for sale and many buyers are struggling to find listings in their price range that meet their needs.”

Refinances, which had seen bigger demand over the last month, were down 14% from the week prior but 14% higher than the same time last year. They accounted for 31.3% of applications, a decline.

Home prices are soaring, recently reaching their sixth all-time high recorded in this year alone. With rates at 7% and higher, the average American buyer has few options available to them.

RisMedia commented that some “problematic” homes have become more attractive to buyers due to the crunch, including houses prone to climate-related weather damage, old houses without renovation, and homes with health risks or high noise levels.

Some Americans are even fleeing the U.S. in search of a home. Japanese “akiya”— abandoned houses in the countryside — can sell for as little as $23,000 USD and are gaining traction among internationally-minded buyers.

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