Purchase mortgage applications for the second straight week reached the lowest level since 1995 amid rising interest rates, according to the Mortgage Bankers Association.

Mortgage applications of all types for the week ending Feb. 24 decreased 5.7 percent on a seasonally adjusted basis from one week earlier, the MBA said in a statement. On an unadjusted basis, the MBA’s weekly mortgage tracker showed a 4 percent decrease compared to the previous week.

After increasing during the week ending Feb. 3, purchase and refinance activity declined in each of the past three weeks. The MBA’s refinance activity tracker decreased 6 percent from the previous week and was 74 percent lower compared to the same week a year ago. The seasonally adjusted purchase activity tracker decreased 6 percent from a week earlier. The unadjusted purchase activity decreased 3 percent compared to a week earlier and was 44 percent lower than the same week one year ago.

Joel Kan, MBA’s vice president and deputy chief economist, said in the statement that mortgage rates faced upward pressures as data on inflation, employment and economic activity indicated that inflation might not be cooling as quickly as anticipated.

“The 30-year fixed rate increased to 6.71 percent last week, the highest rate since November 2022, which drove a 6 percent drop in applications,” Kan said. “After a brief revival in application activity in January when mortgage rates dropped down to 6.2 percent, there has now been three straight weeks of declines in applications as mortgage rates have jumped 50 basis points over the past month.”

The refinance share of mortgage activity decreased to 31.8 percent of total applications last week compared to 32.5 percent during the week ending Feb. 17. The adjustable-rate mortgage share of total mortgage activity decreased to 8.1 percent of total applications from 7.6 percent the previous week.

“Both purchase and refinance applications declined last week, with purchase index at a 28-year low for a second consecutive week,” Kan said. “Purchase applications were 44 percent lower than a year ago, as homebuyers again retreat to the sidelines as higher rates crimp affordability. Refinance applications account for less than a third of all applications and remained more than 70 percent behind last year’s pace, as a majority of homeowners are already locked into lower rates.”

The FHA share of total applications remained unchanged at 12.1 percent, and the VA share of total applications decreased to 11.6 percent compared to 12 percent in the prior week.

MBA: Purchase Mortgage Applications Reach 28-Year Low

by Banker & Tradesman time to read: 2 min