Mortgage demand nosedives as interest rates cross back over 7%
Realtor.com chief economist Danielle Hale breaks down housing affordability on 'Maria Bartiromo's Wall Street.'
A key measure of home-purchase applications fell sharply last week as mortgage rates surged to the highest level in two months.
The Mortgage Bankers Association's (MBA) index of mortgage applications tumbled 10.6% for the week ended Feb. 16, compared with a 2.3% drop the previous week, according to new data published Wednesday.
The data also showed that the average rate on the popular 30-year loan rose to 7.06% last week. While that is down from a peak of 8% in October, it marks the highest level for interest rates since December 2023.
«Mortgage rates moved back above 7 percent last week following news that inflation picked up in January, dimming hopes of a near-term rate cut,» said Mike Fratantoni, MBA's chief economist.
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A home for sale in Cupertino, California, on Feb. 7, 2024. (Photographer: Loren Elliott/Bloomberg via Getty Images / Getty Images)
Housing demand has ground to a halt as rates move higher. Applications for a mortgage to purchase a home dropped 10% from the previous week. Application volume is down 13% compared with the same time last year.
Demand for refinancing also fell last week, declining 11% from the previous week, according to the survey. Compared with the same time last year, refinance applications are up just 0.1%.
«Potential homebuyers are quite sensitive to these rate changes, as affordability is strained with both higher rates and higher home values in this supply-constrained market,» Frantantoni said.
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Houses in San Jose, California, on Feb. 7, 2024.
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