Washington, Jan 5 (IANS): US mortgage applications at the end of 2022 dropped to the lowest level since 1996 amid seasonal headwinds and high financing costs, according to data.

"The end of the year is typically a slower time for the housing market, and with mortgage rates still well above 6 per cent and the threat of a recession looming, mortgage applications continued to decline over the past two weeks to the lowest level since 1996," Joel Kan, vice president and deputy chief economist with the US Mortgage Bankers Association (MBA), said on Wednesday.

The market composite index, a measure of mortgage loan application volume, decreased 13.2 per cent on a seasonally adjusted basis from two weeks earlier, according to the MBA's Weekly Mortgage Applications Survey for the week ending December 30, 2022.

Even as home-price growth slows in many parts of the US, elevated mortgage rates continue to put a strain on affordability and are keeping prospective homebuyers out of the market, said Kan.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 6.58 per cent from 6.42 per cent in the previous week, according to the MBA's survey.

Moreover, the refinance index decreased 16.3 per cent from two weeks ago and was 87 per cent lower than the same week one year ago.

Mortgage rates are lower than the highs in October 2022, but would have to decline substantially to generate additional refinance activity, said Kan.

The 30-year fixed-rate mortgage stood at 6.42 per cent for the week ending December 29, 2022, more than double of the 3.11 per cent for the week ending December 30, 2021, according to surveys by the Federal Home Loan Mortgage Corporation.