Sat. Mar 2nd, 2024

A townhouse for sale in the Upper East Side neighborhood of New York City.

Adam Jeffery | CNBC

Mortgage demand has essentially stalled at the slowest pace since 1995 as mortgage interest rates continue to rise.

Total application volume dropped 1% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

One type of mortgage, however, is seeing new life. The adjustable-rate mortgage share of total demand hit 9.5%, the highest level in nearly a year. ARMs offer slightly lower rates.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 7.90% from 7.70%, with points increasing to 0.77 from 0.71 — including the origination fee — for loans with a 20% down payment.

The average contract interest rate for 5/1 ARMs increased to 6.99% from 6.52%.

“Ten-year Treasury yields climbed higher last week, as global investors remained concerned about the prospect for higher-for-longer rates and burgeoning fiscal deficits,” said Joel Kan, an MBA economist, in a release. “Rates have now risen seven consecutive weeks at a cumulative amount of 69 basis points.”

Applications to refinance a home loan increased 2% from the previous week and were 8% lower than the same week one year ago. That annual comparison is shrinking because refinancing crashed just over a year ago, when mortgage rates first started to rise sharply.

Refinances now make up less than a third of total application activity. Just two years ago, when rates were hovering around record lows, they made up two thirds of mortgage demand.

Applications for a mortgage to purchase a home fell 2% for the week and were 22% lower than the same week one year ago. Buyers right now are not only contending with higher mortgage rates, but also with bare minimum supply. Real estate agents report that the market for existing homes is essentially frozen even before winter hits.

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