The Market Composite Index, a measure of mortgage loan application volume, fell 2.3% to 273.3 during the week ending August 12 as elevated mortgage rates and recession fears cause a growing number of homebuyers to delay their purchasing plans. The 30-year fixed-rate mortgage averaged 5.45% for the week ending August 12, down slightly from 5.47% the week before, but still well above pre-pandemic rates, Realtor.com reports.
The Purchase Index dropped 1% from the previous week, while the Refinance Index fell by 5% and was down 82% year-over-year, pushing mortgage application activity to its lowest level since 2000.
Mortgage application activity has dropped to the “lowest level since 2000,” Joel Kan, associate vice president of economic and industry forecasting at MBA, said in a statement.
The fall in purchase apps falling is due to demand “rapidly drying up,” higher mortgage rates, and fears of a recession, Kan added.
Some buyers have become more non-committal, backing out of deals when they see any potential issues with their home, one brokerage said. Previously, the same homes would have been subject to bidding wars.
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