Loan Apps Tumble By 14%
Mortgage loan application volume tumbled last week, falling to its slowest pace since 1997 as rates hit 6.75%, according to the Mortgage Bankers Association’s weekly survey.
Interest rates are now at their highest point since 2006.
The adjusted Market Composite Index, a measure of mortgage loan application volume, dropped by 14.2%.
The adjusted purchase index fell 13%, while the unadjusted purchase index decreased 13% and was 37% lower YOY.
The refinance index dropped by 18% and was 86% lower than the same time last year. Refis made up 29% of total applications.
“The current rate has more than doubled over the past year and has increased 130 basis points in the past seven weeks alone. The steep increase in rates continued to halt refinance activity and is also impacting purchase applications, which have fallen 37% behind last year’s pace,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“Additionally, the spreads between the conforming rate compared to jumbo loans widened again, and we saw the ARM share rise further to almost 12% of applications.”
ARM activity accounted for 11.8% of total applications.
Kan noted that Hurricane Ian’s devastation in Florida contributed significantly to the application slowdown.
Applications in Florida fell 31%, whereas the overall rate was down 14%.
Floridians have already been dealing with a surge in housing prices as many Americans relocated to the Sunshine State in the last year. Half of the top ten fastest-growing markets are on Florida’s west coast, which was hit hardest by the storm.
With inventory already strained and an influx of residents who lost their homes searching for a new place to live, competition is sure to get even tighter.
“It will certainly compound the situation,” Rebecca Hammock, Seminole County’s development services director, told the New York Times. “Because if we lose housing stock, there’s not a lot of other affordable housing stock to relocate in.”
The FHA share of total applications rose from 12.5% to 13.2%.
The VA and USDA shares remained unchanged at 10.7% and 0.6%, respectively.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased from 6.52% to 6.75%.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances rose from 6.01% to 6.14%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased more than 40 points from 6.17% to 6.70%, and for 5/1 ARMs rose from 5.30% to 5.36%.
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