Demand for mortgages in the US has dipped to the lowest level in 22 years amid rising interest rates and a continued dearth of housing supply, the Mortgage Bankers Association said Wednesday.
The association's seasonally-adjusted index found mortgage applications fell 6.5% during the week ending June 3 compared to the previous week. That week also saw 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) rise to 5.40% from 5.33%.
"Weakness in both purchase and refinance applications pushed the market index down to its lowest level in 22 years," Joel Kan, the association's associate vice president of economic and industry forecasting, said in a statement.
"The purchase market has suffered from persistently low housing inventory and the jump in mortgage rates over the past months. These worsening affordability challenges have been particularly hard on prospective first-time buyers," he added.
Refinance demand, meanwhile, fell 6% from the previous week and was 75% lower than the same week one year ago. That is largely fueled by the fact that while rates are lower than they were a month ago they are high enough to "still suppress refinance activity," said Kan.
Just government refinances "saw a slight increase last week," he added.
Mortgage rates have gone even higher this week, sitting at 5.49%, according to the Mortgage News Daily website.
