US homebuyers’ enthusiasm has been dampened by the spike of mortgage rates as suggested by the sharp decline of mortgage purchase applications over the past seven weeks.

According to the Mortgage Bankers Association (MBA), for the week ending August 11, 2023, mortgage purchase applications decreased by 0.3% on a seasonally adjusted basis from the previous week (v -2.7% prior). The index dropped for a fifth straight week and was down 12.2% over the past seven weeks. It reached the lowest level since February and the second-lowest level since 1995 (when the US population was 70 million lower).

Demand for a new mortgage for a home purchase fell again yesterday. Aside from mid-February, you would have to go all the way back to 1995 to see lower mortgage demand (where the US population is 70 million lower than it is today). pic.twitter.com/NEfmQbobeH

— Longview Economics (@Lvieweconomics) August 17, 2023

The decrease in purchase activity can be attributed to various factors, notably including limited housing inventory and the soaring mortgage rates. On Thursday, Bankrate.com data showed 30-year mortgage rates hit the highest level since September 2000. This situation is expected to have a significant effect on closed sales from August to October. This could potentially lead to existing home sales reaching a 13-year low. 

🇺🇸 Another day, another high for #mortgage rates.
*According to Brankrate‘s data, US 30-Year fixed-rate #mortgage reached 7.60% on Thursday, the highest rate since September 2000 ⚠
*With inventory still under pressure, this situation is expected to have a significant effect on… pic.twitter.com/ZNLI8botz2

— Christophe Barraud🛢🐳 (@C_Barraud) August 18, 2023

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