Mortgage demand at lowest point in decades

The demand for mortgages has dropped to the lowest point since 1996, according to a new survey.

The Mortgage Bankers Association’s seasonally adjusted index found mortgage application volume dropped nearly 3 percent last week, compared with the previous week.

“Mortgage applications declined to the lowest level since December 1996, despite a drop in mortgage rates. 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,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.

The average contract interest rate for 30-year fixed-rate mortgages with balances of $726,000 or less decreased last week.

“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,” Kan said. “The refinance index dropped to its lowest level since January 2023, driven by a 6 percent decline in conventional refinances.”

The survey also found applications to refinance a home dropped 5 percent compared to the previous week and were 30 percent lower than the same week a year ago.

Applications for a mortgage to purchase a home are also below levels compared to last year. The survey found applications dropped 2 percent from the previous week and 29 percent from the same week one year ago.

The survey includes more than 75 percent of all U.S. retail residential mortgage applications, the association noted.