Mortgage application volumes dropped across the board last week, as loan activity remained largely muted due to the
The MBA's seasonally adjusted Market Composite Index, a measure of weekly application volume based on surveys of the trade group's members, declined 3% for the seven-day period ending July 28,
"Mortgage rates edged higher last week, with the 30-year fixed mortgage rate's increase to 6.93% leading to another decline in overall applications," said Joel Kan, vice president and deputy chief economist of the Mortgage Bankers Association, in a press release. The conforming average rose, as the
One week earlier, the 30-year rate had stood at an average of 6.87% among MBA lenders. Points used for 30-year conforming mortgages edged up to 0.68 from 0.65 the previous week for 80% loan-to-value ratio loans.
Meanwhile, the 30-year jumbo rate for loans greater than the conforming amount, which comes in at $726,200 in most markets, remained mostly flat with an average of 6.89%, compared to 6.9% in the prior survey. Points used by borrowers decreased to 0.58 from 0.64.
Mortgage rates, alone, though, are not the only factor leading to subdued activity, according to Kan. Limited housing inventory, combined with rates now approaching 2023 highs, is "crimping affordability for many potential home buyers." The MBA's seasonally adjusted Purchase Index, headed downward 3.2% week over week.
"The purchase index decreased for the third straight week to its lowest level since the beginning of June and remains 26% behind last year's levels," Kan said.
Recent downward-trending purchase volumes come as economists continue to highlight the impact
Current rate levels also mean homeowners are unlikely to consider refinancing for the foreseeable future, with over 90% of them sitting on rates below 6%, Redfin recently reported. The MBA's Refinance Index last week took a drop of 2.5% from the previous survey. Year-over-year, refinances landed 32.3% lower, as the market continues to feel the impact of the higher rates, Kan said.
Refinances made up a 28.9% share of total volume last week, though, inching up from 28.7% seven days earlier.
A week after surging to its highest mark since May, average purchase amounts took a step back down, with conventional application volumes coming in weaker compared to the government-sponsored market, the MBA said. The mean size on new applications fell 2.1% to $423,400 from $432,700.
Decreasing purchase-mortgage amounts were offset, though, by a 1.7% increase among average refinance sizes, which rose to $256,000 from $251,800. The average for all new home loan applications came in at $375,100, a drop of 1.6% from $381,200 the prior week.
Government-backed applications fell, albeit by a slightly more muted 2.1% drop compared to the overall composite index, which led to a small uptick in their overall share. Loans guaranteed by the Federal Housing Administration accounted for 13.3% of activity, up from 12.7% seven days earlier, but new applications coming from the Department of Veterans Affairs saw its share drop to 11.6% from 12.1%. U.S. Department of Agriculture-backed applications grew its share to 0.7% from 0.5% one week earlier.
Apart from the single basis-point drop in the jumbo average, all other rates tracked by the MBA climbed higher last week. The contract rate for the 30-year FHA-backed home loan averaged 6.85% compared to 6.8% the prior week. Borrower points increased to 1.05 from 1.03.
The average of the 15-year contract fixed-rate mortgage inched up 2 basis points to 6.39% from 6.37%. Points increased to 0.78 from 0.75 for 80% LTV loans.
Meanwhile, the 5/1 adjustable-rate mortgage average took a 17 basis point leap to finish at 6.18% compared to 6.01% a week earlier. Borrower used an average of 1.16 points, decreasing from 1.25 week over week, with the loans, which stay fixed for five years before adjusting to market rates.
The adjustable-rate mortgage share of activity, meanwhile, increased to 6.5% of total application volume, up from 5.9% in the prior survey.
