Mortgage applications continued their downward spiral as interest rates climb higher and doubts remain about the strength of the housing market. In the latest update from the Mortgage Bankers Association, for the week ended March 21, applications for home loans fell 3.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index decreased 3 percent.
There has been a steady slide in mortgage applications over the past nine months as the housing market returns to a more sustainable pace. As the chart above shows, applications are near their worst level in years. The Refinance Index plunged 8 percent from the previous week. The Purchase Index managed to increase 3 percent, but on an unadjusted basis, the index was still 17 percent below year-ago levels.
Overall, the refinance share of mortgage activity accounted for 54 percent of total applications, the lowest share since April 2010 and down from 57 percent a week earlier. In fact, the refinance share of mortgage activity has now dropped for seven consecutive weeks. Conventional and government refinance applications led the contraction.