The average interest rate for 30-year fixed-rate mortgages rose to 7.53% last week, causing a 6% decline in total mortgage demand compared with the previous week, CNBC reports. Applications for refinancing dropped by 7%, marking an 11% decrease from the same period the previous year.
Home purchase mortgage applications also fell by 6%, reaching the lowest level of activity since 1995. Rising rates are forcing potential homebuyers to step back from the market, with many opting for adjustable-rate mortgages (ARMs) as rates continue to climb.
“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,” said Kan, who also noted that adjustable-rate mortgage (ARM) applications increased. The ARMs made up 8% of purchase applications, up from 6.7% about a month ago, when interest rates were slightly lower. ARM’s offer lower rates but are fixed for a shorter term, usually five or 10 years.