- According to the Mortgage Bankers Association, Wednesday’s demand for mortgages was at its lowest point in 25 years.
- Weekly total mortgage applications fell by 14.2%, as the 30-year fixed rate mortgage rate rose to 6.75 percent.
- The Category 4 hurricane that slammed into Florida also caused a surge in demand.
According to Wednesday’s report by the Mortgage Bankers Association, demand for mortgages fell to its lowest point in 25 years. Mortgage rates rose toward 7% as mortgage rates continue their climb.
The total mortgage application volume fell by 14.2% over the week ending September 30, compared to the previous week. Overall application activity also dropped to its lowest level since 1997. The industry group stated.
The weekly decline in refinance activity was also 18%. The Refinance Index was 86% less than the previous week one year ago.
Activity slowed down as the 30-year fixed rate mortgage rate rose to 6.75% from 6.52% the week before.
Joel Kan, MBA’s Associate Vice President of Economic Forecasting and Economic Planning, stated that the current rate had more than doubled in the past year. In addition, it has increased 130 basis points in seven weeks.
The Federal Reserve raised interest rates to reduce high inflation. This year, borrowing costs in the housing market rose. More rate increases are expected. The benchmark 10-year Treasury yieldThe, a measure of loans including mortgages was at 3.62% Wednesday, which is considerably higher than 1.51% at end 2021.
Last week’s hurricane Ian caused mortgage demand to drop. Residents in Southwest Florida were forced to flee the region and businesses had to close due to the Category 4 storm. According to the MBA, applications in Florida fell by 31% last week on a non-seasonally adjusted base.
Prices are also rising due to slowdowns in the US housing market. Falling at the fastest pace since the Great Financial CrisisAccording to Black Knight, a data analytics company.
Investors have been pricing in the possibility of another substantial hike of 75 basis points by the Fed next month. The fed funds rates currently range from 3% to 32%.
