Mortgage demand plummets to new three-decade low as rates race toward 8%
foxbusiness.comFOX Business correspondent Madison Alworth shares why for many first-time homebuyers, the American dream is delayed as a result of high mortgage rates and home prices on 'Varney and Co.'
A key measure of home-purchase applications tumbled last week to a nearly three-decade low as consumer demand cooled sharply amid a recent spike in mortgage rates.
The Mortgage Bankers Association's index of mortgage applications fell 6.9% last week to the lowest level since 1995, according to new data published Wednesday.
The data also showed that the average rate on the popular 30-year loan climbed for the sixth straight week to 7.7%, the highest level since November 2000.
«Homebuying activity continues to pull back given reduced purchasing power from higher rates and the ongoing lack of available inventory,» said Joel Kan, MBA's deputy chief economist.
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Homes in Hercules, California, on Aug. 16, 2023. (David Paul Morris/Bloomberg via / Getty Images)
The steep rates weighed heavily on housing demand, with applications for a mortgage to purchase a home also tumbling 5% for the week. Application volume is down 21% compared with the same time last year.
Demand for refinancing also fell further last week, sliding another 10%, according to the survey. Compared with the same time last year, refinance applications are down 12%.
«Refinance activity was at its lowest level since early 2023,» Kan said. «There is very limited refinance incentive with mortgage rates at multi-decade highs.»
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