Demand for mortgages crashed to a multi-decade low last week as prospective homebuyers are contending with surging inflation and rising interest rates, the New York Post reported. The volume of mortgage loan applications sank 6.3% for the week ending on July 15 compared to one week earlier, according to the Mortgage Bankers Association (MBA). The index measuring activity dropped to its lowest level since 2000. Refinance applications also declined by 4% compared to the previous week and have fallen by 80% compared to the same week one year ago, the survey found. The MBA’s purchase index, which measures the volume of applications for mortgages to buy homes, fell 7% week-over-week and 19% year-over-year. The downtick in mortgage demand coincided with a surge in interest rates, which have nearly doubled since January as the Federal Reserve hikes its benchmark rate to combat inflation. While the Fed rate does not directly impact mortgages, all forms of borrowing are becoming more expensive on the expectation of tightened economic policy. The average contract interest rate on 30-year fixed-rate mortgages with conforming loan balances jumped to 5.82% last week, up from 5.74% the previous week. The same mortgage had a 3.11% rate during the same week one year earlier.
