US mortgage applications fall more than 13% as rate climbs to highest since November

ISTANBUL

US mortgage applications saw a weekly decline of more than 13%, while the 30-year fixed rate climbed to its highest since November, according to a report Wednesday by the Mortgage Bankers Association (MBA).

The Market Composite Index, a measure of mortgage loan application volume, fell 13.3% on a seasonally adjusted basis for the week ending Feb. 17, compared to the previous week. On an unadjusted basis, the index fell 4% from the previous week.

The 30-year fixed mortgage jumped 23 basis points to 6.62%, its highest in more than three months, following a gain last week for the first time in six weeks.

"The jump led to the purchase applications index decreasing 18 percent to its lowest level since 1995," MBA Vice President and Deputy Chief Economist Joel Kan said in a report. "This time of the year is typically when purchase activity ramps up, but over the past two weeks, rates have increased significantly as financial markets digest data on inflation cooling at a slower pace than expected."

"The increase in mortgages rates has put many homebuyers back on the sidelines once again, especially first-time homebuyers who are most sensitive to affordability challenges and the impact of higher rates. Refinance applications declined last week and remained more than 70 percent behind last year’s pace. Given that rates are over 2.5 percentage points higher than a year ago, we expect that refinance activity will remain depressed for some time," he added.

The average contract interest rate for 15-year fixed-rate mortgages rose to 5.98% from 5.85% for the week.

The MBA survey covers more than 75% of all US retail residential mortgage applications.