US mortgage applications fall 4.2% as rates jump to highest since 2000

By Ovunc Kutlu

ISTANBUL (AA) - US mortgage applications dove more than 4% last week as mortgage interest rates rose for the fourth straight week, climbing to their highest since 2000, according to a report Wednesday by the Mortgage Bankers Association (MBA).

The Market Composite Index, a measure of mortgage loan application volume, plummeted 4.2% on a seasonally adjusted basis for the week ending Aug. 18, compared to the previous week. On an unadjusted basis, the index declined 6%.

"Treasury yields continued to spike last week as markets grappled with illiquidity and concerns that the resilient economy will keep inflation stubbornly high," MBA Vice President and Deputy Chief Economist Joel Kan said in a statement."This spike pushed mortgage rates higher last week, with the 30-year fixed rate increasing to 7.31 percent – the highest level since December 2000."

The rate stood at 7.16% for the week ending Aug. 11 -- the highest since October 2022.

"Applications for home purchase mortgages dropped to their lowest level since April 1995, as homebuyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power. Low housing supply is also keeping home prices high in many markets, adding to the affordability hurdles buyers are facing," added Kan.

The average contract interest rate for a 15-year fixed-rate mortgage increased to 6.72%, from 6.57%, for the week.

The MBA survey covers more than 75% of US retail residential mortgage applications.