Mortgage Application Volume Falls to 28-Year Low Amid Rising Costs

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $726,200 or less increased from 6.62% to 6.71% last week, causing prospective buyers to pull back at the start of what many housing experts hoped would be an active spring buying season. Mortgage applications to purchase a home fell 6% last week compared with the previous week, sending the total volume to a 28-year low, CNBC reports.

Mortgage rates have moved 50 basis points higher in just the past month as the Federal Reserve continues to hound the housing market in its ongoing efforts to tame inflation in the U.S. economy.

“Data on inflation, employment, and economic activity have signaled that inflation may not be cooling as quickly as anticipated, which continues to put upward pressure on rates,” said Joel Kan, an MBA economist.

Mortgage rates haven’t done much to start this week, but the trajectory now appears to be higher, after a brief respite in January. Lower rates to start the year caused a brief surge in homebuying, but mortgage demand from homebuyers would seem to indicate a very slow spring is ahead.

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