The Mortgage Bankers Association’s index of mortgage applications fell 4.6% last week to the lowest level since February, according to new data published Wednesday.
“Mortgage applications declined almost five percent last week as borrowers remained sensitive to higher rates,” said Joel Kan, MBA’s deputy chief economist. “Since rates have been so volatile and for-sale inventory still scarce, we have yet to see sustained growth in purchase applications.”
Demand for refinancing also continued to plunge last week, sliding another 5%, according to the survey. Compared with the same time last year, refinance applications are down more than 40%.
The interest rate-sensitive housing market has cooled rapidly in the wake of the Federal Reserve’s aggressive tightening campaign. Policymakers already lifted the benchmark federal funds rate 10 consecutive times and have opened the door to another increase at their June meeting following a slew of stronger-than-expected economic data.
For months, higher mortgage rates have dampened consumer demand and brought down home prices. As rates have slowly fallen from a peak of 7%, the housing market has shown early signs of stirring back to life. However, the return to lower mortgage rates has not been smooth. In fact, rates moved significantly higher to start the week, according to a separate MBA survey, with rates surging to 6.91%.