Mortgage demand, which saw four straight months of declines, plunged last week to the lowest level since 1997, as interest rates continued to surge.
Homebuyers’ demand for mortgages fell 4% for the week and was 38% lower than the same week one year ago, according to the Mortgage Bankers Association. Applications to refinance a home loan plummeted 7% compared with the previous week, in seasonally adjusted terms. Demand was 86% lower than the same week one year ago.
The number of borrowers who can benefit from refinancing is at a record low. Interest rates were so low during the first two years of the Covid pandemic that the vast majority of borrowers with higher rates already refinanced.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) soared to 6.94% from 6.81%, with points decreasing to 0.95 from 0.97 (including the origination fee) for loans with a 20% down payment. That is the highest rate since 2002 on the MBA’s index.