Mortgage applications drop to lowest level since 1997

Application activity dropped to its slowest pace since 1997, according to the last week.

Demand for mortgage applications fell by 14.2%, according to the weekly mortgage application survey from the Mortgage Banker's Association.

Joel Kan, MBA associate vice president of economic and industry forecasting said last week that the 30 year fixed rate hit 6.75% the highest level since 2006, the highest rate since 2006. The current rate has increased 130 basis points in the past seven weeks and has more than doubled over the past year. Demand has fallen in all sectors of the mortgage industry.

The Refinance Index decreased 18% from the previous week and was 86% lower than the same week a year ago.

The Purchase Index decreased by 13% from a week ago.

The rise in rates continued to halt refinance activity, which has affected purchase applications, which have fallen 37 percent behind last year s pace, and we saw the ARM share rise further to almost 12 percent of applications, said Kan. Florida was particularly affected by Hurricane Ian.

Applications in Florida fell 31 percent, compared to 14 percent overall, on a non-seasonally adjusted basis. Since the Great Recession, home prices in the U.S. have fallen at the fastest monthly pace, evidence that activity is slowing down in the housing market.

In August, Median home prices fell by 0.98% from a month earlier, after a 1.05% drop in July, according to Black Knight, a mortgage analytics firm.

The benchmark interest rate was raised by 75 basis points for the third consecutive month in September, following similar rate hikes in June and July, the most aggressive series of increases since 1994. The key federal funds rate has been at a range of 3% to 3.25%, the highest since the 2008 financial crisis. It is the fifth consecutive rate increase this year.

The survey covers over 75% of U.S. retail residential mortgage applications and has been conducted weekly since 1990.