Mortgage demand fell to its lowest level in more than a month as interest rates continued to climb, according to data released Thursday by the Mortgage Bankers Association (MBA).
The MBA’s Market Composite Index, which measures mortgage loan application volume, decreased last week by 4.4 percent on a seasonally adjusted basis from the week before.
“Mortgage applications fell to their lowest level in a month last week as rates for most loan types increased,” Joel Kan, the MBA’s vice president and deputy chief economist, said in a statement.
The 30-year fixed interest rate increased to 6.85 percent, Kahn said, the highest since the end of May. Applications for mortgages also fell for the first week since May, as higher interest rates spooked some buyers.
“Rates are still over a percentage point higher than a year ago, and housing affordability is still a challenge in many parts of the country,” Kan said.
Mortgage rates have fluctuated widely for more than a year amid the Federal Reserve’s attempt to curb inflation by raising interest rates.
The Fed’s efforts have impacted buyer affordability as mortgage rates, combined with already higher prices, have pushed many would be buyers out of the market — especially young and lower-income buyers.
The central bank paused its rate hiking cycle last month after 10 consecutive increases, but officials projected at least two more interest rate hikes this year.
Since then, mortgage rates have risen slightly, though separate home sales data shows buyers may be adjusting to the new normal of mortgage rates above 6 percent.
New home sales jumped by 12.2 percent in May to a seasonally adjusted annual rate of 763,000 units — up 20 percent from a year ago.