Mortgage volumes plunged even further last week after
The MBA's Market Composite Index, a measure of weekly loan applications based on surveys of association members, fell a seasonally adjusted 3.7% for the seven-day period ending Aug. 26. Compared to the same week a year ago, volumes were 64% lower.
Originators reported decreases in both purchase and refinance applications. In particular, the Refinance Index fell 8% from the previous week and 83% year over year, as lenders grapple with what many in the banking industry are calling a
The seasonally adjusted Purchase Index also decreased 2% from the week prior. "Purchase applications have declined in eight of the last nine weeks, as demand continues to shrink due to higher rates and a weaker economic outlook," said Joel Kan, MBA's associate vice president of economic and industry forecasting, in a press release.
Purchases also came in 23% below its level from the same seven-day period last year. But the MBA noted some opportunities for a turnaround as supply-and-demand adjusts to the
"Rising inventories and slower home-price growth could potentially bring some buyers back into the market later this year," Kan said.
While evidence of
The seasonally adjusted Government Index fell 3.8% week over week, but the share of federally backed loans relative to overall activity remained flat. Loans insured
A recent reduction in competition may be
Meanwhile,
"Mortgage rates and Treasury yields rose last week as Federal Reserve officials indicated that short-term rates would stay higher for longer," Kan said. "Mortgage rates have been volatile over the past month, bouncing between 5.4% and 5.8%."
The average contract fixed rate for the 30-year mortgage with balances below the conforming amount of $647,200 jumped 15 basis points to 5.8% from 5.65% one week earlier among MBA members. Points increased to 0.71 from 0.68 for 80% loan-to-value ratio (LTV) loans.
The contract average rate of 30-year jumbo loans above the conforming limit also increased, but at a slower pace, rising to 5.32% from 5.28% week over week, with points decreasing to 0.48 from 0.58.
The 30-year fixed-contract rate for FHA-backed mortgages averaged 15 basis points higher, rising to 5.57% from 5.43% the previous week. Points decreased to 1.09 from 1.1.
The contract 15-year FRM average also increased to 5.1% from 5.01%, with points dropping to 0.82 from 0.84 seven days earlier.
Adjustable-rate mortgages bucked the trend, though, with the 5/1 ARM average edging down 3 basis points to 4.78% from 4.81% the prior week. Points decreased to 0.61 from 0.74.