Mortgage demand continued its downward trajectory last week as interest rates moved back above 7%.
Mortgage applications decreased by 10.6% on a seasonally adjusted basis during the week ending Feb. 16, according to the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey.
A stronger-than-expected inflation reading sent mortgage rates back north of 7% and also lowered the possibility of a near-term rate cut by the Federal Reserve, according to Mike Fratantoni, MBA’s senior vice president and chief economist.
“Mortgage applications dropped [as a result] with a larger decline in refinance applications,” Fratantoni said in a statement. “Potential homebuyers are quite sensitive to these rate changes, as affordability is strained with both higher rates and higher home values in this supply-constrained market.”
Purchase applications decreased by 10% from one week earlier on a seasonally adjusted basis, while refinance applications fell by 11% in the same period. Last week, refis accounted for 32.6% of all applications, down from 34% the previous week.
The 30-year fixed-rate mortgage averaged 6.77% as of Feb. 15, according to Freddie Mac’s Primary Mortgage Market Survey. As of Wednesday, the 30-year fixed rate on HousingWire’s Mortgage Rates Center, powered by Polly, stood at 7.21%.
The MBA survey shows that the average mortgage rate for 30-year fixed loans with conforming balances ($766,550 or less) increased to 7.06%, up from 6.87% the week before. Meanwhile, rates on jumbo loans (greater than $766,550) increased to 7.16%, up from 7%.
The Federal Housing Administration (FHA) share of total applications decreased to 13.2% last week, down from 13.4% the week prior. The U.S. Department of Veterans Affairs (VA) share declined to 12.1%, down from 13.3% the week before. And the U.S. Department of Agriculture (USDA) share increased to 0.5%, up from 0.4%.
The MBA survey, conducted weekly since 1990, covers more than 75% of all U.S. retail residential mortgage applications.
