Mortgage applications fell for the fifth consecutive week as the 30-year fixed-rate mortgage rose to 7.31%, its highest level since December 2000. For the week that ended August 18, mortgage applications fell 4.2% from the prior week, according to data from the Mortgage Bankers Association.
This decrease in applications comes on the heels of a drastic U.S. bond yields spike last week. The yields jumped to their highest level since 2008, north of 4.3%.
“Investors in the bond market were reacting to the government issuing debt while expecting the Federal Reserve to increase rates in September amid persistent inflation,” HousingWire’s Flávia Furlan Nunes wrote last week.
Elevated rates and the erosion of purchasing power has resulted in potential buyers fleeing the market, noted Joel Kan, MBA’s vice president and deputy chief economist in a statement.
“Low housing supply is also keeping home prices high in many markets, adding to the affordability hurdles buyers are facing,” he added.
The share of adjustable-rate mortgage applications increased to 7.6% last week, the highest level in five months, and the number of ARM applications picked up by 4%.
“Some homebuyers are looking to lower their monthly payments by accepting some interest rate risk after the initial fixed period,” said Kan.
Meanwhile, the refinance index decreased 3% since last week and is 35% lower than it was the same week a year ago. The unadjusted purchase index decreased 7% compared with the previous week and was 30% lower than the same week one year ago.
At Mortgage News Daily, 30-year fixed-rate mortgage rates were at 7.49% on Tuesday. At HousingWire’s Mortgage Rates Center, Optimal Blue had rates at 7.30% on Tuesday.
The Federal Housing Administration loans’ share increased to 14.3% from 13.8% the week prior. The U.S. Department of Veteran Affairs loans’ share decreased to 11.6% from 11.8 the week prior. Lastly, the U.S. Department of Agriculture loans’ share increased to 0.5% from 0.4% a week prior.
The average contract interest rate for 5/1 ARMs fell to 6.50% from 6.20% a week prior.
