Mortgage application rates fell to the lowest level in more than 20 years for the week ended June 3, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.

The survey found mortgage loan application volume fell 6.5% from a week earlier on a seasonally adjusted basis and 17% on an unadjusted basis, while refinance volume fell 6% from the previous week and was 75% lower than the same time last year. 

Purchase volume also took a hit with a seasonally adjusted 7% decrease from last year. Meanwhile, the unadjusted purchase index fell 18% compared to the previous week and down 21% from 2021. 

Joel Kan, MBA’s associate vice president of economic and industry forecasting, cited weakness in both purchase and refinance applications for pushing the market down to its lowest level in 22 years. At the same time, the 30-year fixed-rate rose 5.4% after three consecutive declines. Kan said even though those rates were lower than they were four weeks ago, they remain high enough to suppress refinance activity. 

“Only government refinances saw a slight increase last week,” he said. “The purchase market has suffered from persistently low housing inventory and the jump in mortgage rates over the past months. These worsening affordability challenges have been particularly hard on prospective first-time buyers.”

For the week ended June 3, refinances increased to 32.2% of all applications, up from 31.5% the previous week, while adjustable-rate mortgage applications fell to 8.2%. 

According to the report, FHA applications grew during the same time period, to 11.3% from 10.8 the previous week. Meanwhile, VA applications increased to 11.4% from 10.2% the prior week and USDA applications remained unchanged at 0.5%.

The average interest rate for a 30-year, fixed-rate mortgage with a loan balance of $647,200 or less rose to 5.4% from 5.33%. Points also increased, rising to 0.60 from 0.51 for 80% loan-to-value ratio loans.