Application volume dropped 1.2 percent last week alone, according to the Mortgage Bankers Association's (MBA) index, and has been steadily dropping as interest rates have risen. This drastic change is connected to the soaring inflation the U.S. has been experiencing. This is the lowest mortgage demand has been in the last 22 years.
Mortgage rates had been easing over the past couple of months, however, they were once again pushed up at the discretion of the Federal Reserve. Federal Reserve Chairman Jerome Powell expressed that the central bank would stay tough on inflation, even at the inconvenience of consumers. The 30-year fixed mortgage rate has reached over 6 percent for the first time since 2008.
The Federal Reserve will potentially raise rates even higher at their next meeting due to the August report showing that inflation had risen yet again.
Mortgage News Daily's Matthew Graham wrote that the Fed "was willing to consider something even higher if the data was convincing," and that "this was arguably convincing enough for the Fed to at least open the conversation." Read more at CNBC.