How possible inflation peak impacted mortgage rates this week

The 15-year fixed-rate mortgage averaged 4.55%, down from 4.59% the week before and up from 2.16% last year. The five-year Treasury-indexed hybrid adjustable-rate mortgage saw a four-basis-point drop from the previous week, down to 4.39%. A year ago, at this time, it averaged 2.43%.

“The market continues to absorb the cumulative impact of the large price and rate increases that led to a plunge in affordability,” Khater said. “As a result, over the rest of the year, purchase demand likely will continue to drag, supply will modestly increase, and home price growth will decelerate.”

Data from the Mortgage Bankers Association supports Khater’s forecast. Overall, mortgage application volume was down 2.3% on a seasonally adjusted basis. Refinance and purchase applications also dipped by 5% and 1%, respectively.

“Mortgage application activity was lower last week, with overall applications declining over 2% to their lowest level since 2000,” said Joel Kan, AVP of economic and industry forecasting at MBA. “Home purchase applications continued to be held down by rapidly drying up demand, as high mortgage rates, challenging affordability, and a gloomier outlook of the economy kept buyers on the sidelines.