REAL ESTATE

Weekly mortgage demand from homebuyers tumbles 12%, as higher interest rates take their toll

PUBLISHED WED, MAY 18 20227:00 AM EDT

Diana Olick
@IN/DIANAOLICK
@DIANAOLICKCNBC
@DIANAOLICK

KEY POINTS
• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.49% from 5.53%
• Mortgage applications to purchase a home fell 12% week to week and were 15% lower compared with the same week one year ago.
• Applications to refinance a home loan continued their landslide, falling another 10% week to week.

Mortgage rates actually fell slightly last week, but the damage has already been done to housing affordability. Both refinance and purchase loan demand dropped, pulling total mortgage application volume down 11% for the week, according to the Mortgage Bankers Association’s seasonally adjusted index.

Mortgage applications to purchase a home declined 12% week to week and were 15% lower compared with the same week one year ago. That was the first weekly drop in homebuyer demand since the third week in April. Mortgage rates have risen over 2 full percentage points since the start of the year, and home prices are up more than 20% from a year ago.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.49% from 5.53%, with points increasing to 0.74 from 0.73 (including the origination fee) for loans with a 20% down payment.

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Applications to refinance a home loan continued their landslide, falling another 10% week to week. Refinance demand was 76% lower than the same week one year ago. Two years of record-low interest rates during the Covid pandemic incited a refinance boom which has now gone bust. There is simply a very small pool of borrowers who can now benefit from a refinance.

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