Higher Mortgage Rates Lead to Fewer Takers

The recent spike in borrowing costs has made buying a home increasingly unappealing. In fact, the volume of mortgage applications among home purchasers hasn’t been this slow since the pandemic’s early days. 

Despite a tiny uptick last week, the Mortgage Bankers Association’s Purchase Index—a measure of applications—stayed near its lowest level since May 2020, the chart below shows. The latest figures add to recent evidence that the hot pandemic housing market is starting to cool off. 

Mortgage rates hovering near their highest since 2009 have jacked up monthly payments to levels unaffordable to many potential buyers, and are a grim contrast to the record low rates seen within the last two years. With so many would-be buyers being priced out by those higher rates, the pandemic-era real estate frenzy is starting to die down.

“Higher rates, low inventory, and high prices are keeping prospective buyers out of the market,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting, wrote in a commentary.

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