US Mortgage Demand Plummets to Lowest Since Beginning of Pandemic

Despite historically low mortgage rates and a gradual shift towards permanent work-from-home flexibility, the demand for mortgages continues to fall, suggesting that low supply and sky-high property prices are pushing an increasing number of potential homeowners out of the real estate market.

According to the latest figures published by the Mortgage Banker’s Association (MBA), mortgage applications fell 1.8% last week, marking the second consecutive week of declines and the lowest level since the onset of the pandemic in 2020. Even as mortgage rates descended, home purchase applications decreased 1%, and are 14% lower compared to year-ago levels, while home refinance applications dropped 2% last week, and sat 8% lower than one year ago.

“Swift home-price growth across much of the country, driven by insufficient housing supply, is weighing on the purchase market and is pushing average loan amounts higher,” explained MBA associate vice president of economic and industry forecasting Joel Kan.

Mortgage rates tend to track closely to the 10-year Treasury yield, and declined even in the wake of a robust economic recovery. “Treasury yields have been volatile despite mostly positive economic news, including last week’s June jobs report, which showed ongoing improvements in the labor market. However, rates continued to move lower – especially late in the week,” said Kan. “The 30-year fixed rate was 11 basis points lower than the same week a year ago, but many borrowers previously refinanced at even lower rates.”

Information for this briefing was found via the MBA. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.