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POTENTIAL HOME BUYERS HAVE NO BID FOR JUMP IN BORROWING COSTS

Investors had one lone crumb of economic data on Wednesday to distract them from a certain chipmaker's after hours results.

The elevator pitch: the average 30-year fixed contract rate USMG=ECI added 10 basis points to settle at 6.56%, the highest level since early April, according to the Mortgage Bankers Association.

Potential homebuyers weren't enthused by that development. Applications for loans to buy homes USMGPI=ECI - among the housing market's most forward-looking indicators - dropped 4.1%. Refi demand USMGR=ECI, which accounted for a 41.9% share of the mortgage pie, essentially moved sideways, easing by a negligible 0.1%.

Combined, home loan demand dropped by 2.3% last week.

"Ongoing concerns around inflation from higher fuel costs, combined with rising concerns over global public debt, pushed Treasury yields higher in the U.S. and abroad last week," writes Joel Kan, MBA’s deputy chief economist ."This resulted in higher mortgage rates across the board, with the 30-year fixed rate increasing to 6.56 percent, its highest level in seven weeks.”

“Overall applications were down to the lowest level in five weeks as purchase borrowers pulled back across conventional and government loan types."

The 30-year fixed rate currently sits 36 basis points below where it was during the same week a year ago.

Over that same period, purchase applications have grown by 8.0%, while refi demand has increased 34.8%.

Here's a handy housing dashboard, which paints a portrait of a dampened sector.

Since the fall of 2022, signed contracts for the sales of pre-owned homes have been in the basement, home price growth has lagged broader inflation, building permits have turned languid, homebuilder sentiment has been loitering south of 50 - indicating pessimism among builders.

And housing related stocks .HGX have underperformed the broader market.

(Stephen Culp)

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