M Mortgage

US Mortgage Purchase Applications Fell 16.6% Over the Past 8 Weeks, Hitting Lowest Since 1995

23 August, 2023
us mortgage purchase applications

US homebuyers’ enthusiasm has beeen dampened by the spike of mortgage rates as suggested by the sharp decline of mortgage purchase applications over the past eight weeks. They declined for a sixth straight week, reaching the lowest level since 1995.

us mortgage purchase applications

According to the Mortgage Bankers Association (MBA), for the week ending August 18, 2023, mortgage purchase applications decreased by 5.0% on a seasonally adjusted basis from the previous week (v -0.3% prior). The index dropped for a sixth straight week and was down 16.6% over the past eight weeks. It reached the lowest level April 1995 (when the US population was ~70 million lower).

The decrease in purchase activity can be attributed to various factors, notably including limited housing inventory and the soaring mortgage rates. “Treasury yields continued to spike last week as markets grappled with illiquidity and concerns that the resilient economy will keep inflation stubbornly high. This spike pushed mortgage rates higher last week, with the 30-year fixed rate increasing to 7.31 percent – the highest level since December 2000,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. On Monday, Bankrate.com data showed 30-year mortgage rates hit the highest level since September 2000.

This situation is expected to have a significant effect on closed sales from August to October. Contract closings decreased 2.2% in July, from a month earlier to a 4.07 million annualized pace, National Association of Realtors data showed Tuesday. The recent spike of 30-year mortgage rates and the crash of mortgage purchase applications imply that existing home sales will fall further in the coming months, reaching a 13-year low.