Mortgage activity in the United States have continued to decline as interest rates reached their highest levels in over a decade-and-a-half amid economic turmoil and high inflation.
The Mortgage Bankers Association said in its Weekly Mortgage Application Survey on Wednesday that mortgage activity declined 2% from the previous week, with refinance activity declining by a similar amount.
Mike Fratantoni, MBA’s senior vice president and chief economist, noted that mortgage interest rates “moved higher once again during the first week of the fourth quarter of 2022, with the 30-year conforming rate reaching 6.81 percent, the highest level since 2006.”
“Mortgage rates increased across all product types in MBA’s survey, with the largest, a 20-basis-point increase, for 5-year ARM loans,” Fratantoni added. “The ARM share of applications remained quite high at 11.7 percent – just below last week’s level.”
Rising interest rates, pushed by the Federal Reserve as it continues to try and squelch sky-high levels of inflation, have thrown cold water on the U.S. housing market, which since the outset of the COVID pandemic has been marked by aggressive buying and sharply constricted stock.
The hike in rates has raised fears of a possible looming recession, with analysts warning of potential major job losses in the months ahead, particularly in the first quarter of 2023.