U.S. mortgage applications fall to lowest level since 1996

Photo taken on July 21, 2022 shows a panoramic view of Manhattan, New York City, the United States. (Photo by Emma Li/Xinhua)

Even as home-price growth slows in many parts of the United States, elevated mortgage rates continue to put a strain on affordability and are keeping prospective homebuyers out of the market, said an economist.

NEW YORK, Jan. 4 (Xinhua) -- U.S. mortgage applications at the end of 2022 dropped to the lowest level since 1996 amid seasonal headwinds and high financing costs, according to data issued by the U.S. Mortgage Bankers Association (MBA) on Wednesday.

"The end of the year is typically a slower time for the housing market, and with mortgage rates still well above 6 percent and the threat of a recession looming, mortgage applications continued to decline over the past two weeks to the lowest level since 1996," said Joel Kan, vice president and deputy chief economist with the MBA.

The market composite index, a measure of mortgage loan application volume, decreased 13.2 percent on a seasonally adjusted basis from two weeks earlier, according to the MBA's Weekly Mortgage Applications Survey for the week ending Dec. 30, 2022.

Even as home-price growth slows in many parts of the United States, elevated mortgage rates continue to put a strain on affordability and are keeping prospective homebuyers out of the market, said Kan.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 6.58 percent from 6.42 percent in the previous week, according to the MBA's survey.

Moreover, the refinance index decreased 16.3 percent from two weeks ago and was 87 percent lower than the same week one year ago.

Mortgage rates are lower than the highs in October 2022, but would have to decline substantially to generate additional refinance activity, said Kan.

The 30-year fixed-rate mortgage stood at 6.42 percent for the week ending Dec. 29, 2022, more than double of the 3.11 percent for the week ending Dec. 30, 2021, according to surveys by the Federal Home Loan Mortgage Corporation.