By Nathalie Voit
Demand for mortgage applications continues to tumble amid surging interest rates, data from the Mortgage Bankers Association (MBA) found.
For the week ending April 1, mortgage applications fell 6.3% from one week earlier as the average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances of $647,200 or less increased 10 basis points to 4.90%. Compared with one year ago, application volume was down 41%, according to data from the MBA’s Market Composite Index. Application volume is now at its lowest since the spring of 2019.
Refinance rates also dipped as the number of Americans opting to refinance a home loan continued to decline. Week over week, the refinance index slipped 10%. The index is down 62% from one year ago, MBA said in a press release.
The refinance share of all applications tumbled to 38.8% for the week ending April 1 from 51% one year earlier.
Mortgage applications to purchase a single-family home also dropped 3% from one week ago and 9% from the same week one year ago, according to the release.
“Mortgage application volume continues to decline due to rapidly rising mortgage rates, as financial markets expect significantly tighter monetary policy in the coming months. The 30-year fixed mortgage rate increased for the fourth consecutive week to 4.90 percent and is now more than 1.5 percentage points higher than a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
“The hot job market and rapid wage growth continue to support housing demand, despite the surge in rates and swift home-price appreciation. However, insufficient for-sale inventory is restraining purchase activity. Additionally, the elevated average purchase loan size, and steeper 8 percent drop in FHA purchase applications, are both indicative of first-time buyers being disproportionately impacted by supply and affordability challenges,” he added.
This is the fourth continuous week of increases in the mortgage rate. Just one year ago, the rate was 3.36%, according to data from MBA.