With interest rates around 7.0% for a 30 year fixed mortgage, it is no surprise that total mortgage application volume is lower. Borrowers are not going to refinance their current mortgage with these higher rates, and new borrowers either don’t want to buy now and lock in a high rate, or can’t afford the payment with the higher rate.
“Mortgage Rates increased for the 10th consecutive week, with the 30-year fixed rate reaching 7.16 percent, the highest rate since 2001. The ongoing trend of rising mortgage rates continues to depress mortgage application activity, which remained at its slowest pace since 1997,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Refinance applications were essentially unchanged, but purchase applications declined 2 percent to the slowest pace since 2015 – over 40 percent behind last year’s pace.”
What does the future hold? What will rates and our housing market do going forward? The Mortgage Bankers Association’s (MBA) economic forecast for the coming year was released this week. They believe both economic and housing market weakness will continue into 2023 and will “drive a 3% decline in purchase originations and a decline of 24% in refinance applications.”