Mortgage interest rates rose again last week, reaching the highest level in nearly a quarter century and further sidelining mortgage borrowers. The Mortgage Bankers Association (MBA) reported that its Market Composite Index, a measure of loan application volume, declined 4.2 percent on a seasonally adjusted basis from one week earlier and was 6 percent lower before adjustment. The Refinance Index decreased 3 percent from the previous week and was 35 percent lower than the same week one year ago although the refinance share of mortgage activity ticked up to 29.5 percent from 28.6 percent a week earlier. [refiappschart] The seasonally adjusted Purchase Index was down 5 percent and the unadjusted version lost 7 percent compared with the previous week. Purchase applications were 30 percent lower than the same week one year ago. [purchaseappschart] “Treasury yields continued to spike last week as markets grappled with illiquidity and concerns that the resilient economy will keep inflation stubbornly high. This spike pushed mortgage rates higher last week, with the 30-year fixed rate increasing to 7.31 percent – the highest level since December 2000 ,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Applications for home purchase mortgages dropped to their lowest level since April 1995, as homebuyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power. Low housing supply is also keeping home prices high in many markets, adding to the affordability hurdles buyers are facing.”
