Mortgage applications virtually unchanged despite rate hike – why?

“Purchase applications increased for the first time after six weeks of declines but remained close to 2015 lows, as homebuyers remained sidelined by higher rates and ongoing economic uncertainty,” said Joel Kan, MBA’s deputy chief economist. “Refinances continued to fall, with the index hitting its lowest level since August 2000.”

The refinance share of mortgage activity decreased five basis points to 28.1% of total applications, while the adjustable-rate mortgage share of activity increased to 12%.

Demand for mortgage loans continued to wane as mortgage rates climbed higher. MBA reported Wednesday that the contract rate on a 30-year fixed-rate mortgage spiked to 7.14%.

“Mortgage rates edged higher last week following news that the Federal Reserve will continue raising short-term rates to combat high inflation,” Kan said. “The 30-year fixed rate remained above 7% for the third consecutive week, and there were increases for most other loan types.”