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Economic Report: Mortgage demand falls in December to the lowest level since 1996

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The numbers: Mortgage applications fell by 13.2% to close off the last two weeks of 2022.

Mortgage applications are now at the lowest level in 27 years. 

The real-estate market is slow during the holiday season, so that weighed on the market composite index, a measure of mortgage application volume, the Mortgage Bankers Association (MBA) said on Wednesday. 

The market index fell by 13.2% to 184.5 for the week ending December 30, from two weeks earlier. A year ago, the index stood at 572.8.

Key details: The refinance index fell 16.3%, and was down 87% compared to a year ago. 

The purchase index — which measures mortgage applications for the purchase of a home — fell by 12.2% from the last two weeks. Purchase applications were low due to mortgage rates staying firmly above 6%.

The average contract rate for the 30-year mortgage for homes sold for $647,200 or less was 6.58% for the week ending December 30.

That’s up from 6.42% the week before, the MBA said. 

For homes sold for over $647,200, the average rate for the 30-year was 6.12%. 

The 15-year rose to 6.06%.

The rate for adjustable-rate mortgages rose to 5.61%.

The big picture: Mortgage rates have haunted the housing market into 2023. With rates above 6%, buyers continue to find homeownership unaffordable. 

But the last two weeks of December are usually slow, so look to next week’s report to get a better sense of mortgage demand.

What are they saying? “The end of the year is typically a slower time for the housing market,” Joel Kan, vice president and deputy chief economist at the MBA, said.

“And with mortgage rates still well above 6 percent and the threat of a recession looming, mortgage applications continued to decline over the past two weeks to the lowest level since 1996,” he added.

Market reaction: The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.695%

fell below 3.7% in early morning trading Wednesday.

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