Mortgage demand slumps as rates surge to 23-year high
FOX 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 dropped again last week as consumer demand cooled sharply amid a recent surge in mortgage rates.
The Mortgage Bankers Association's index of mortgage applications fell 1.3% last week, according to new data published Wednesday.
The data also showed that the average rate on the popular 30-year loan climbed to 7.41% from 7.31% the previous week, the highest level since December 2000. By comparison, just one year ago, rates hovered around 5.65%.
«Mortgage rates moved to their highest levels in over 20 years as Treasury yields increased late last week,» said Joel Kan, MBA's deputy chief economist. «Based on the FOMC’s most recent projections, rates are expected to be higher for longer, which drove the increase in Treasury yields.»
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Homes in Hercules, California, on Aug. 16, 2023. (David Paul Morris/Bloomberg via / Getty Images)
The steeper rates weighed heavily on housing demand, with applications for a mortgage to purchase a home sliding 2% for the week. Application volume is down 27% compared with the same time last year.
Demand for refinancing also continued to fall last week, sliding another 1%, according to the survey. Compared with the same time last year, refinance applications are down 21%.
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«Both prospective homebuyers and homeowners continue to feel the impact of these elevated rates,» Kan said. «Many homeowners have little incentive to refinance.»
The interest
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