Mortgage demand hits 22-year low as loan applications continue to drop
New survey shows a 6.3% drop in mortgage loan applications
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Mortgage applications decreased last week, the third week in a row, as they now sit at the lowest level since 2000, according to a new survey.
On Wednesday, the Mortgage Bankers Association (MBA) released its weekly mortgage applications survey that found the Market Composite Index, which measures the volume of loan applications, decreased by 6.3% last week when adjusted to a seasonal basis.
On an unadjusted basis, the Index saw a 17% increase compared to the previous week.
Houses in the Harris Ranch community of Boise, Idaho, US, on Friday, July 1, 2022. (Jeremy Erickson/Bloomberg via Getty Images / Getty Images)
"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."
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Houses in Boise, Idaho, US, on Friday, July 1, 2022. (Jeremy Erickson/Bloomberg via Getty Images / Getty Images)
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The Refinance Index and Purchase Index saw similar decreases, of 4% and 7% from a week ago, respectively. The Refinance Index now sits 80% lower than a year ago.
The FHA share of total applications increased to 12.4%, from 11.7% the week prior, while the VA share of total applications decreased to 10.6% from last week’s 11.2%.
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The survey covered over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.