Mortgage loan application volume tumbled again, falling by 6.3% last week, the Mortgage Bankers Association’s (MBA) weekly survey shows.
The adjusted Market Composite Index, a measure of mortgage loan application volume, decreased by 6.3%. The adjusted purchase index dropped 7%, while the unadjusted purchase index increased by 16% and was 19% lower YOY.
The refinance index fell by 4% and made up 31.4% of total applications, down 80% from the same time last year.
ARM activity dropped to 9.5% of total applications.
“Mortgage applications declined for the third week in a row, reaching the lowest level since 2000. Similarly, with most mortgage rates more than two percentage points higher than a year ago, demand for refinances continues to plummet, with MBA’s refinance index also falling to a 22-year low,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“Purchase activity declined for both conventional and government loans, as the weakening economic outlook, high inflation, and persistent affordability challenges are impacting buyer demand. The decline in recent purchase applications aligns with slower homebuilding activity due to reduced buyer traffic and ongoing building material shortages and higher costs.”
Rising costs have put downward pressure on demand for the first time since the housing boom started. June single-family starts were down 19% since February and 16% YOY as homebuilder confidence tanked.
British economist Ian Shepherdson recently told Forbes that the U.S. housing market is in a “meltdown” and that homebuilder confidence, which is at a two-year low, will fall further still.
“Pretty soon, anyone who has bought a home in recent months will be sitting on a loss,” he said.
The FHA share of total applications rose from 11.7% 1o 12.4%. The VA share of total applications fell to 10.6% from 11.2%, while the USDA rose to 0.6% from 0.5%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 5.82% from 5.74%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances rose from 5.25% to 5.31%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased from 5.49% to 5.50%, and for 5/1 ARMs dropped from 4.71% to 4.60%.