Mortgage rates race toward 8% as demand plummets to three-decade low
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 tumbled last week to a nearly three-decade low as consumer demand cooled sharply amid a recent surge in mortgage rates.
The Mortgage Bankers Association's index of mortgage applications fell 6% last week to the lowest level since 1996, according to new data published Wednesday.
The data also showed that the average rate on the popular 30-year loan climbed for the fourth straight week to 7.53%, the highest level since 2000. By comparison, just one year ago, rates hovered around 5.65%.
«Mortgage rates continued to move higher last week as markets digested the recent upswing in Treasury yields,» said Joel Kan, MBA’s deputy chief economist. «As a result, mortgage applications ground to a halt, dropping to the lowest level since 1996.»
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Homes in Hercules, California, on Aug. 16, 2023. (David Paul Morris/Bloomberg via / Getty Images)
The steep rates continued to weigh heavily on housing demand, with applications for a mortgage to purchase a home also tumbling 6% for the week. Application volume is down 22% compared with the same time last year.
Demand for refinancing also fell further last week, sliding another 7%, according to the survey. Compared with the same time last year, refinance applications are down 11%.
«The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market,» Kan said.
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