The demand for mortgages in the United States has dropped to its lowest level since 1995 as interest rates for mortgages near 8%, according to a report released by the Mortgage Bankers Association.
The report also showed that applications for home loans dropped 6.5% during the week of October 11th. This is the lowest level since the group started keeping records in 1995.
Experts attribute the decline in mortgage demand to the higher interest rates, which are at their highest levels since July 2019. The average fixed mortgage rate is now at 7.94%, up from 4.48% in January.
The higher interest rates have made it more expensive for borrowers to take out mortgages, causing more people to put off their plans to buy homes, at least until rates go back to more-reasonable levels.
The increase in rates has also cooled off the housing market, which had been hot for the past several months as people rushed to buy a home before rates increased further. The higher rates have made it much more difficult to make a profit when flipping a house.
The decline in mortgage applications also highlights the financial challenges that many Americans are facing due to the coronavirus pandemic. Many people are out of work, while others have seen their hours reduced or are working fewer hours than before. This has caused many people’s incomes to go down, making it difficult to pay for housing, even at more favorable rates.