Mortgage demand falls as interest rates increase to 13-year high

Mortgage demand fell last week as the average interest rates across the U.S. increased to a 13-year high, according to data from the Mortgage Bankers Association. 

Mortgage applications dropped 12% on a weekly basis, making it the first time in three weeks that the demand fell, according to Fox Business. Mortgage rates have increased by two percentage points since the beginning of the year, and home prices are 20% higher than a year ago. 

"Purchase applications fell 12% last week, as prospective homebuyers have been put off by the higher rates and worsening affordability conditions," said Joel Kan, an associate vice president of economic and industry forecasting at MBA.

"General uncertainty about the near-term economic outlook, as well as recent stock market volatility, may be causing some households to delay their home search," he added.

Additionally, this week’s mortgage demand is 15% lower compared to the same week a year ago. Mortgage rates have increased by 2% since the beginning of the year, rising at the fastest growth rate since May 1994. 

Mortgage rates rising two percentage points since the start of the year, 

A year ago, the 30-year loan rate was around 3%. Nowadays, the average 30-year rate is around 5.378%. 

Refinance applications also fell 10% week to week. Compared to one year ago, refinancing demand is 76% lower than last year. No matter how you look at it, the pandemic days of record-low interest rates are over.