Mortgage application volume fell 0.9% last week as the small drop in interest rates slowed refinancing activity, while economic worries likely kept purchasers out of the market, according to the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey for the week ending Aug. 16 found that the refinance index increased 0.4%
The seasonally adjusted purchase index decreased 4% from one week earlier, while the unadjusted purchase index decreased 5% compared with the previous week and was 5% higher than the same week one year ago.
"In a week where worries over global economic growth drove U.S. Treasury yields 13 basis points lower, the 30-year fixed mortgage rate decreased just three basis points. As a result, the refinance index saw only a slight increase but remained at its highest level since July 2016," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release.
"The small moves in rates and refinancing are potentially signs that lenders may be approaching capacity constraints as they continue to deal with the largest wave of refinance activity in three years. The refinance share of applications, at almost 63%, was also at its highest level since September 2016."
Adjustable-rate mortgage activity increased to 6.4% from 6% of total applications and the share of Federal Housing Administration-insured loan applications increased to 9.7% from 9.5% the week prior.
The share of applications for Veterans Affairs-guaranteed loans decreased to 11.6% from 12.2% and the U.S. Department of Agriculture/Rural Development share remained unchanged from 0.5% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased 3 basis to 3.9%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350), the average contract rate remained unchanged at 3.88%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 6 basis points to 3.87%. For 15-year fixed-rate mortgages, the average increased 2 basis points to 3.3%. The average contract interest rate for 5/1 ARMs decreased to 3.35% from 3.43%.