Mortgage demand declines as U.S. homebuyers seek less-expensive loans

July 13 (UPI) -- Fewer Americans are applying for a home mortgage and those who are buying homes are spending less, according to an industry report on Wednesday.

The Mortgage Bankers Association said in its weekly update on Wednesday that overall applications fell last week by 4%. The volume was about 18% lower than it was a year ago.

The decrease in demand, the report says, has been influenced by rising prices in the United States. The Labor Department said in its monthly update on Wednesday that inflation is up 9.1% over the past 12 months.

Although applications declined, mortgage rates have been mostly steady over the past two weeks.

Wednesday's report also noted that the average size of new mortgages is down.

"After reaching a record $460,000 in March 2022, the average purchase loan size was $415,000 last week, pulled lower by the potential moderation of home-price growth and weaker purchase activity at the upper end of the market," MBA economist Joel Kan said in a statement.

Applications to refinance were up 2% for the week, but were 80% off the volume from a year ago.

Higher interest rates have been the primary factor for the decline in applications to refinance.