Rising rates continue to drive down mortgage applications
The total number of U.S. mortgage applications declined again for the week ending March 12, the fifth time in six weeks that overall mortgage applications have fallen and the seventh in the past nine, according to data from the Mortgage Bankers Association.
Why it matters: The decline shows that rising U.S. interest rates are having a significant impact on the mortgage market, weakening demand, especially for refinance applications.
Yes, but: MBA's index of purchase applications has risen in each of the past three weeks, as home buyers have started to make up a greater share of overall mortgage applications.
- The refinance share of mortgage activity decreased to 62.9% of total applications from 64.5% the previous week, according to MBA's data.
- That suggests more new buyers are entering the market with fewer current homeowners resetting their rates.
Watch this space: "The 30-year fixed rate increased to its highest level since June 2020, and all other surveyed rates were either flat or increased," Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a release.
- "After reaching a recent high in the last week of January, the refinance index has since fallen 26 percent to its lowest level since September 2020. Rates have jumped 36 basis points since the end of January."
The big picture: Even with rising rates, MBA is expecting mortgage purchase originations in 2021 to rise 11% to a record $1.57 trillion, a spokesperson tells Axios.
- That would eclipse the previous all-time high of $1.51 trillion in 2005.
What's next: February U.S. housing starts and building permits data will be released on Wednesday at 8:30am ET.