Demand for mortgages weakened again as limited inventory and skyrocketing prices continue to keep some prospective buyers out of the market.
Mortgage application volume fell 4% week over week on a seasonally adjusted basis but was up 20% on an unadjusted basis, according to the Mortgage Bankers Association’s survey released Wednesday. Refinance applications dropped 3% week over week and slipped 18% year over year. Seasonally adjusted purchase apps decreased 6% week over week, while the unadjusted purchase index rose 17%.
“On a seasonally adjusted basis compared to the July 04 holiday week, mortgage applications were lower across the board, with purchase applications back to near their lowest levels since May 2020,” said Joel Kan, AVP of economic and industry forecasting at MBA. “Refinance activity fell over the week, but because rates have stayed relatively low, the pace of applications was close to its highest level since early May 2021.”
Kan explained that the volatility in mortgage rates spurred the drop in mortgage applications.
“The 10-year Treasury yield dropped sharply last week, in part due to investors becoming more concerned about the spread of COVID variants and their impact on global economic growth. There were mixed changes in mortgage rates as a result, with the 30-year fixed rate increasing slightly to 3.11% after two weeks of declines,” he said. “Other surveyed rates moved lower, with the 15-year fixed-rate loan, used by around 20% of refinance borrowers, decreasing to 2.46% – the lowest level since January 2021.”
The refi share of mortgage activity posted an eight-basis-point increase, up to 64.9% of total applications. The adjustable-rate mortgage (ARM) share of activity dipped to 3.3% of total applications.