Mortgage applications ground to a halt for the week ending Sept. 29, falling 6% from the week prior as mortgage rates jumped to a 23-year high of 7.53%, according to new weekly data from the Mortgage Bankers Association.
Mortgage application activity is now at its lowest level since 1996, the MBA reported.
Purchase mortgage application volume, in particular, slowed considerably for the week ending Sept. 29, down 22% from a year ago, according to unadjusted data. Meanwhile, refinance applications slumped 7% from the previous week and were 11% lower than the same time a year ago.
“The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market,” Joel Kan, MBA’s vice president and deputy chief economist, said in a news release.
Bucking the downward trend, the share of adjustable-rate mortgage (ARM) applications rose to 8% of all loan applications, the MBA found. Kan attributed the uptick in ARM demand to homebuyers looking for ways to lower their mortgage payments amid rate increases.
Still, mortgage rates for home loan products across the board, including ARMs, pushed higher for the week ending Sept. 29. The average contract interest rate for 5/1 ARMs hit 6.49%, up slightly from 6.47% a week prior, the MBA reported.
Meanwhile, the refinance share of mortgage activity decreased to 31.7% of total applications from 31.9% the previous week.
The share of Federal Housing Administration (FHA) loan activity inched up to 14.5% from 14.1% for the week ending Sept. 29. Meanwhile, the share of Department of Veterans Affairs (VA) loan activity of total mortgage applications was 10.1%, down from 10.9% the week prior. The Department of Agriculture (USDA) loan share of activity remained unchanged at 0.5%.