U.S. Home Refinance Gauge Slides to Three-Year Low as Rates Rise
(Bloomberg) -- A measure of applications to refinance a U.S. home slid last week to a three-year low and filings to purchase a property dropped by the most since mid-February as mortgage rates continued to rise.
The Mortgage Bankers Association's refinancing index slumped 9.9% in the week ended April 1 to 1,166.3, the Washington-based group said Wednesday. The group's measure of purchases declined 3.4%.
The MBA said the average contract rate on a 30-year fixed mortgage rose 10 basis points to 4.9%, and is up 1.07 percentage points in the last eight weeks. That's the swiftest rise since 2003. The effective rate, which includes the effects of compounding, rose to 5.06%. Both rates are the highest since late 2018.
“Mortgage application volume continues to decline due to rapidly rising mortgage rates, as financial markets expect significantly tighter monetary policy in the coming months,” Joel Kan, MBA's associate vice president of economic and industry forecasting, said in a statement.
Refinancing now makes up 38.8% of all mortgage application activity, down from about 60% a year ago and the smallest share since May 2019.
The survey covers over 75% of all U.S. retail residential mortgage applications.
©2022 Bloomberg L.P.
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