US mortgage applications fall 9.4% as rates climb

Purchase applications have not yet picked up, overall level of purchase activity 12% lower than a year ago, says economist

By Ovunc Kutlu

ISTANBUL (AA) – US mortgage applications decreased 9.4% as mortgage interest rates climbed at the end of 2023, according to a report Wednesday by the Mortgage Bankers Association (MBA).

The market composite index, a measure of mortgage loan application volume, fell 9.4% on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the index decreased 38% compared with two weeks ago.

"Markets continued to digest the impact of slowing inflation and potential rate cuts from the Federal Reserve, helping mortgage rates to stay at levels close to the lowest since mid-2023," said Joel Kan, MBA vice president and deputy chief economist, in a statement.

The 30-year fixed mortgage rate edged higher last week and ended 2023 at 6.76%, according to Kan.

"The recent decline in rates has given the housing market some cause for optimism going into 2024, but purchase applications have not yet picked up in response, with the overall level of purchase activity 12% lower than a year ago," he added.

The average contract interest rate for a 15-year fixed-rate mortgage, on the other hand, decreased to 6.26% from 6.41%.

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

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