Mortgage application rates plummeted last week in the latest sign rising interest rates have started to temper demand in the booming housing market, but experts note plunging demand won’t quickly pull prices down due to historically low levels of inventory, with some forecasting prices should continue to rise throughout the year.

Mortgage applications fell 6.5% from one week earlier in the week ending June 3, according to the Mortgage Bankers Association’s weekly mortgage applications survey.

In a statement, MBA’s Joel Kan noted rising interest rates, spurred by the Federal Reserve’s efforts to combat inflation, have made home buying more expensive and, as a result, pushed down both purchase and refinance applications to the lowest level in 22 years.

Though they plunged early in the pandemic, mortgage rates have skyrocketed since the Fed started hiking rates in April, with the latest 30-year fixed-rate mortgages averaging about 5.1%, up from less than 3% one year earlier.
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