Mortgage applications plunged 14% as interest rates rose and Hurricane Ian crushed demand.

A sign showing the open house on May 4, 2022 in the Alhambra, California.

Frederick J. Brown | AFP | Getty Images

The highest mortgage rates in over 20 years coincided with one of the deadliest hurricanes on record in the United States, both contributing to a sharp decline in mortgage demand.

The Mortgage Bankers Association’s seasonally adjusted index showed total mortgage applications last week fell 14.2% from the previous week to the lowest level since 1997.

Average contractual interest rates for 30-year fixed-rate mortgages, in line with loan balances (under $647,200), increased from 6.52% to 6.75%, and points decreased from 1.15 to 0.95, for loans down 20% (including composition fees). payment.

“Current interest rates have more than doubled in the past year, rising 130 basis points in the last seven weeks alone,” said MBA economist Joel Kan.

Weekly refinancing volumes, which are most sensitive to interest rate movements, fell 18% over the week, down 86% from the same week a year ago. Mortgage refinancing rates fell to 29% from the previous week’s 30.2%.

Mortgage applications to buy a home were down 13% in a week, a steep 37% year-over-year decline.

‚ÄúThere was also the impact of Hurricane Ian’s arrival in Florida last week, which prompted widespread closures and evacuations. It has decreased by 31%,” Kan added.

Rising interest rates have made an already expensive housing market even more expensive, with homebuyers turning to variable rate mortgages that offer lower interest rates. That percentage of activity increased to 11.8% from about 3% earlier this year when mortgage rates were less than half of what they are now, and 8.5% a month ago.

Another Mortgage News Daily study found that mortgage rates fell slightly this week, but all bets are off at the end of the week when the important monthly jobs report is released. Mortgage rates could decisively move in either direction, depending on how investors view the results and how the Federal Reserve reacts to those results.

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