Mortgage demand hits 30-year low.
Demand for mortgages in the United States fell nearly 3 percent last week, to the lowest point since 1996, according to a new survey.
The Mortgage Bankers Association’s seasonally adjusted Market Composite Index, published on Sept. 6, saw a 2.9 percent decline in mortgage application volume the week before, compared with the previous week.
The MBA said its survey included more than 75 percent of all retail residential mortgage applications nationwide.
The Federal Reserve’s lowering of interest rates to nearly zero in the first months of the pandemic resulted in a two-year home purchasing boom while homeowners refinanced their mortgages.
Mortgage Applications Fall As Real Estate Industry Tumbles
“Mortgage applications declined to the lowest level since December 1996, despite a drop in mortgage rates,” said Joel Kan, MBA’s vice president and deputy chief economist, in a statement.
“Both purchase and refinance applications fell, with the purchase index hitting a 28-year low, as prospective buyers remain on the sidelines due to low housing inventory and elevated mortgage rates.”
The lack of housing has been exasperated by high mortgage rates, which make it less likely for existing homeowners to sell, as many had purchased their homes under lower rates.
In the first half of 2023, only 1 percent of all homes exchanged hands, the lowest in a decade.
Existing home sales tumbled 2.2 percent in July, while new home sales surged 4.4 percent, as recent constructions pick up the slack.
Meanwhile, rising construction costs have also worsened the spike in new home prices, while labor costs and a lack of skilled workers have added to the challenges faced by the industry, said Robert Dietz, the chief economist at the National Association of Home Builders.
“Historically, there is a lag between what sellers are willing to relinquish their property for and the rise in interest rates. In all sectors of the real estate market, sellers have enjoyed record prices for a long time,” Philip Nicozisis, a real estate developer in Florida, told The Epoch Times.
30-Year Mortgages Remain Above 7 Percent
Meanwhile, the average interest rate for a 30-year fixed-rate mortgage with a balance of $726,000 or less, fell during the same period.
“The 30-year fixed mortgage rate decreased to 7.21 percent last week, but rates remained more than a full percentage point higher than a year ago, despite mixed data on the health of the economy and signs of a cooling job market,” Mr. Kan added.
“The refinance index dropped to its lowest level since January 2023, driven by a 6 percent decline in conventional refinance
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