America’s property freeze: Mortgage demand falls to lowest level since 1996 as high interest rates deter home movers
Mortgage applications have dropped to their lowest levels since 1996 as higher interest rates take their toll on buyers.
Data from the Mortgage Bankers Association (MBA) shows demand for new loans last week was 27 percent lower than during the same period last year.
It comes as interest rates on home loans are hovering at 7.12 percent – deterring owners from moving. Separate analysis by the Atlanta Fed also revealed recently that home buyers were facing the least affordable market since 2006.
MBA economist Joel Kan said: ‘Mortgage applications decreased for the seventh time in eight weeks, reaching the lowest level since 1996.
‘Given how high rates are right now, there continues to be minimal refinance activity and a reduced incentive for homeowners to sell and buy a new home at a higher rate.’
The property market has reached an effective stalemate as most homebuyers locked into mortgage rates when they were hovering between 2 and 3 percent.
However rates have since more than doubled, with the average deal on a 30-year mortgage now at 7.27 percent according to the MBA.
Loans have been pushed up by the Federal Reserve’s aggressive campaign of hiking interest rates to a 22-year high to tame rampant inflation.
It means a homeowner with a $400,000 home now faces a monthly mortgage payment of $2,597.
But had they fixed in September 2021 – when rates were around 3 percent – their monthly payments would be almost $1,000 less expensive at $1,602.
It has created a ‘lock-in’ effect with households refusing to move to avoid higher mortgages – thus constraining the nation’s already-limited supply of housing and keeping