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- Mortgage applications just plunged to their lowest level since 1996 last week, per the MBA's latest survey.
- That comes as the 30-year mortgage rate touches 7.53% in the past week, the highest in 23 years.
- Experts say the housing affordability crisis won't improve until mortgage rates dial back significantly.
The US housing market is still tightening, with mortgage rates hitting a 23-year-high in the last week, which has helped push applications for home loans to their lowest levels since 1996, according to the Mortgage Bankers Association.
Mortgage applications dropped 6% over the last week, the MBA's latest seasonally adjusted survey shows. That decline came as the average rate on the 30-year mortgage rose to 7.53%, the highest cost of borrowing for since 2000.
The move has been influenced by a recent surge in bond yields, as investors fret over higher-for-longer interest rates and the potential risks of the US's growing debt pile. The yield on the 10-year US Treasury recently notched a 16-year-high, trading around 4.773% on Wednesday.
"Mortgage rates continued to move higher last week as markets digested the recent upswing in Treasury yields," according to MBA vice president and deputy chief economist Joel Kan. "As a result, mortgage applications grounded to a halt, dropping to the lowest level since 1996. The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market."
The highest mortgage rates in over two decades have put the housing market in a deep freeze, with prospective buyers and sellers choosing to wait on sidelines until the cost of borrowing comes down. But that's unlikely to happen anytime soon – rates would likely need to cool to the 5% range to increase housing inventory and jumpstart home sales, industry experts say.
But experts say that affordability conditions could improve slightly this fall. A growing number of sellers are beginning to slash prices for homes on the market, which could set up a rare buying opportunity for those still looking, Zillow said in a report this week.