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Mortgage applications drop as rates climb

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U.S. mortgage rates continue to climb while the number of Americans applying for a new mortgage fell by 3.7% last week, according to the Mortgage Bankers Association’s latest seasonally adjusted index. File Photo by Alexis C. Glenn/UPI | <a href="/News_Photos/lp/aee5d4fb7d8b211ff23a534b14aee2c6/" target="_blank">License Photo</a>
U.S. mortgage rates continue to climb while the number of Americans applying for a new mortgage fell by 3.7% last week, according to the Mortgage Bankers Association’s latest seasonally adjusted index. File Photo by Alexis C. Glenn/UPI | License Photo

Sept. 28 (UPI) -- U.S. mortgage rates continue to climb while the number of Americans applying for a new mortgage fell by 3.7% last week, according to the Mortgage Bankers Association's latest seasonally adjusted index.

Applications to refinance a home loan declined 11% for the week and were 84% lower than the same week one year ago, according to the association's latest figures.

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The drop comes amid rising uncertainty in the housing market as the U.S. Federal Reserve continues to raise the benchmark interest rate.

Refinancing levels are now at a 22-year low, with few borrowers that can benefit from today's higher rates.

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The average interest rate for a 15-year fixed mortgage sat at 6.12% on Wednesday, which is up from 5.81% at the same point last week, according to Forbes.

Mortgage rates have hit a 14-year high.

"Applications for both purchase and refinances declined last week as mortgage rates continued to increase to multi-year highs following more aggressive policy measures from the Federal Reserve to bring down inflation," MBA associate vice president Joel Kan said in a statement.

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"Additionally, ongoing uncertainty about the impact of the Fed's reduction of its MBS and Treasury holdings is adding to the volatility in mortgage rates. The 30-year fixed rate was 6.52% its highest level since mid-2008. After a brief pause in July, mortgage rates have increased more than a percentage point over the past six weeks."

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The refinance share of mortgage activity decreased to 30.2% of total applications from 32.5% the previous week. Mortgage applications to purchase a home decreased 0.4% for the week and were 29% lower than the same week the previous year.

"With rates now more than double what they were a year ago, the pace of refinancing is running at a 22-year low and last week was more than 80% below last year's level. Similarly, purchase activity was 29% lower than a year ago, with higher rates and economic uncertainty weighing on buyers' decisions," said Kan.

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