Mortgage demand drops to a 22-year low as higher interest rates and inflation crush homebuyers
Mortgage demand drops to a 22-year low as higher interest rates and inflation crush homebuyers
Abstract
Mortgage demand fell more than 6% last week compared with the previous week, hitting the lowest level since 2000, according to the Mortgage Bankers Association's seasonally adjusted index. Applications for a mortgage to purchase a home dropped 7% for the week and were 19% lower than the same week in 2021. Mortgage rates moved higher again last week after falling slightly over the past three weeks. Demand for refinances, which are highly rate sensitive, fell 4% for the week and were 80% lower than the same week last year. Mortgage interest rates haven't moved much this week, but that could change very soon due to increasing bond market volatility. The Federal Reserve is expected to hike rates by another 75 basis points next week, and other central banks are taking similar action against inflation. A basis point equals 0.01%. "This is especially true next week as markets digest the newest Fed policy announcement next Wednesday, but Thursday's policy announcement from the European Central Bank could also cause enough of a stir to impact U.S. rates," noted Matthew Graham, chief operating officer of Mortgage News Daily.