Mortgage application volume down due to higher rates

Mortgage application volume fell for the first time in four weeks as rates rose to their highest level in more than a month, the Mortgage Bankers Association said.

The group's Weekly Application Survey fell by 4.4% on a seasonally adjusted basis compared with the prior week for the period ended June 30.

Results for the week of June 23 were adjusted for Juneteenth. That is why on an unadjusted basis, application activity rose 6%.

"Mortgage applications fell to their lowest level in a month last week as rates for most loan types increased," said Joel Kan, vice president and deputy chief economist in a press release. "As mortgage-Treasury spreads remained wide, the 30-year fixed rate increased to 6.85%, the highest rate since the end of May."

Kan was referring to the 30-year fixed rate conforming (under $726,200) mortgage, which rose 10 basis points from 6.75% the previous week with points increasing to 0.65 from 0.64.

Jumbo loan rates increased as well, although by a smaller amount, just 4 basis points to 6.95%, with points down to 0.64 from 0.69.

Purchase activity fell 5% seasonally adjusted, while unadjusted it was up 6% versus the previous seven days, but down 22% from one year prior.

Kan put the onus on higher rates for the first decline in purchase volume in a month.

"However, the average loan size for a purchase application declined to $423,500 — its lowest level since January 2023," he continued. "This was likely driven by reduced purchase activity in some high-price markets and more activity in some of the lower price tiers as buyers searched for more affordable options."

The average purchase loan amount applied for during the week of June 23 was $428,000.

The refinance index, which is reported on an adjusted basis, was down 4% from the June 23 report and 30% lower than the same week in 2022. Refis made up 27.4% of all new applications, up from 27.2% one week prior.

The 30-year Federal Housing Administration-insured loan average rate rose to 6.68% from 6.63%, while the 15-year FRM was up to 6.3% from 6.23%.

Bucking the trend was the average for the 5/1 adjustable rate mortgage, down 28 basis points to 6%. ARM applications made up 6.2% of the week's activity, up from 6.1% one week earlier.

FHA volume rose to 13% of new applications submitted, up from 12.9% week-over-week, while Veterans Affairs-guaranteed loan share fell to 11.7% from 12.2%. The U.S. Department of Agriculture program had its share remain unchanged at 0.4%.