High Mortgage Rates Rapidly Cooling Housing Demand

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.”

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.