Home lending activity slowed last week, largely due to a pullback in
The MBA's Market Composite Index, a measure of application activity based on surveys of the trade group's members, decreased a seasonally adjusted 3.9% for the seven days ending July 26. The
The latest weekly drop came as interest rates showed little movement, with the 30-year rate for conforming balances remaining at 6.82% week over week. Points
Rates across the board stayed within a few basis points of the previous week's levels. The lack of movement failed to stoke any consumer momentum, including in the Federal Housing Administration- and Department of Veterans Affairs-sponsored markets that had helped propel activity earlier this summer.
"In recent weeks, there have been some small bursts of refinance activity, particularly for FHA and VA loans. Last week, VA refi application volume dropped sharply, which drove the aggregate result," said MBA senior vice president and Chief Economist Mike Fratantoni in a press release.
On the other hand, federally sponsored purchase applications increased. Elevated government activity, though, could not lift the overall Purchase Index over the prior week's level, as it fell 1.5%, seasonally adjusted. On a year-over-year basis, purchase lending activity was also 13.8% lower, with
Meanwhile, the Refinance Index dropped 7.2% from one week earlier. While much of the decline was attributable to the slowdown in VA lending, conventional refinances also decreased after reaching its highest mark since 2022 a week earlier. Compared to the same seven days last year, refinances ended up with 31.6% more applications. The share of refinances relative to total activity shrank to 38.2% from 39.7% from week to week.
"Borrowers may be waiting for signs that mortgage rates will drift lower as the Federal Reserve begins to cut short-term rates," Fratantoni said. The central bank could possibly announce a rate move as early as Wednesday afternoon, but most experts expect any cut would likely come later this year.
The slice of the lending market coming through government borrowing also contracted, despite an increase in total applications coming through the FHA. The share of FHA-guaranteed mortgage made up 14.2% of activity, compared to 13.4% a week earlier. FHA growth was offset by the fall in VA mortgages, which garnered 13.5%, down from 14.8%. The share of loans coming through the U.S. Department of Agriculture grew to 0.5% from 0.4%.
Adjustable-rate mortgages nabbed a 5.7% share of all applications, slipping from 5.8% seven days earlier. Interest in the loans tends to rise and fall in the same direction as fixed mortgage rates, and their share of lending has diminished over the past two months.
While the conforming average flatlined, other 30-year fixed rates saw slight declines compared to the previous survey. The 30-year fixed jumbo rate edged back to 7.07% from 7.09%. Points used to buy down the rate inched down to 0.53 from 0.54 for the loans, whose jumbo balances make them only eligible for sale in the private market.
The contract fixed average of the 30-year FHA-backed mortgage also pulled back 2 basis points to 6.69% from 6.71% one week earlier. Points decreased to 0.84 from 0.86 for 80% LTV-ratio loans.
The 15-year fixed rate climbed up to 6.27% from 6.21% in the prior survey. Borrowers typically used 0.49 in points, down from 0.51 the previous week.
Meanwhile, the contract average of the 5/1 adjustable-rate mortgage clocked in at 6.22%, up 3 basis points from 6.19%. Points fell to 0.45 from 0.52 on the ARMs, which start out with a fixed 60-month term before becoming variable.
