Mortgage applications fall to lowest level since 1997

Application activity fell to its slowest pace since 1997, and overall application activity dropped to its lowest level in the past 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's associate vice president of economic and industry forecasting, said the 30 year fixed rate hit 6.75% the highest rate since 2006 and was the highest since 2006. The current rate has doubled over the past year and has increased 130 basis points in the past seven weeks alone. 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 steep increase in rates continued to halt refinance activity, and the spreads between conforming rates and jumbo loans have fallen 37 percent behind last year s pace, and we saw the ARM share rise further to almost 12 percent of applications. Florida was particularly impacted 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 a faster monthly pace, evidence that activity in the housing market is slowing down.

In August, Median home prices fell by 0.98% from a month earlier, following 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 month in September, after similar rate hikes in June and July, the most aggressive series of increases since 1994. The key federal funds rate is now the highest since the 2008 financial crisis, with a range of 3% to 3.25%. 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.