Mortgage loan application volumes in the U.S. dropped another 6.3 percent over the past week on a seasonally adjusted basis and 6 percent in the absolute, according to data from the Mortgage Bankers Association.
On a more granular basis, applications to refinance dropped another 10 percent over the past week and were down 62 percent on a year-over-year basis, dropping to a 3-year low, while purchase mortgage activity ticked down 3 percent on both an absolute and seasonally adjusted basis and was 9 percent lower than at the same time last year, despite posturing that a spike in mortgage rates would actually spur an increase in purchase activity as buyers rushed to “lock in at lower rates” and rates poised to climb.
Much higher rates + eviction/foreclosure hurdles loosening means the bottom end of the market will be shaken out, with an accompanying political fight.
Kind of missed the boat if you were waiting to “lock in lower rates”. 30yr fixed closed at 5.08% yesterday. The FOMC notes from the last Fed meeting indicated very aggressive moves by the Fed to raise rates more rapidly in the coming months.
Keep in mind that a 5% rate is still below the historical averages for a 30-year mortgage and the projected moves by the Fed shouldn’t catch any plugged-in readers by surprise.
The last time we had inflation by some measures at these levels was in the early 1980’s and 30Y mortgage rates were closer to 10%.
Namelink is a Personal Consumption Expenditure index chart from the Fed for Personal Consumption Expenditures ex Food and Energy.
Will we smash asset values with higher rates and hard land into a recession, or will everyone get bigger and bigger raises and wage-price spiral for a while? Either way, it seems likely short term rates will keep going up.