Market News

Mortgage applications have cratered to their lowest point since 2000. Here's what it means and why you should care - BUSINESS INSIDER

JULY 22, 2022

Top of the morning, markets people. Phil Rosen here, writing to you from a humid and glistening New York.

Growing up, when I heard adults talk about "refinancing," it sounded awfully boring. But since covering Wall Street, I've learned that there's real drama in housing markets.

Today I'm breaking down what's going on with US mortgages, and why you should care.

If this was forwarded to you, sign up here. Download Insider's app here.

US households have built up $26 trillion in home equity, the largest share of the overall housing stock since the 1980s.halbergman/Getty Images

1. Mortgage demand is at a 22-year low. That means the last time Americans were this discouraged by the housing market, George W. Bush was starting his first term and a gallon of gas was about $1.50.

According to the Mortgage Bankers Association, mortgage demand slipped 6.3% last week as high prices throttled US residential real estate. That makes three consecutive weeks of declines, and suggests more downside ahead.

"Purchase activity declined for both conventional and government loans, as the weakening economic outlook, high inflation, and persistent affordability challenges are impacting buyer demand," the MBA's economic forecaster said.

There's a lot at play here. For one, mortgage rates have roughly doubled this year, from about 3% in January to close to 6% this month.

But prices aren't coming down — at least not yet. Despite declining sales, last month marked another all-time high for median home prices.

The MBA's refinancing index, meanwhile, plummeted 4% over the last week and 80% over the last year.

And soaring inflation hasn't helped. High prices and surging rates are weighing on buyer sentiment. In turn, homebuilders are more pessimistic about the market than at any point since the start of the pandemic. Moody's chief economist Mark Zandi even warned the housing market is about to enter a "deep freeze," as first-time homebuyers can't afford to buy in.

The takeaway from all of this is that the housing market has certainly cooled, but not quite enough for buyers to be able to cope with higher mortgage rates on top of prices that appear to still be climbing.


This website uses cookies We use cookies to personalise content and ads, to provide social media features and to analyse our traffic. We also share information about your use of our site with our social media, advertising and analytics partners who may combine it with other information that you've provided to them or that they've collected from your use of their services
Real Time Analytics