Applications drop to one-month low.
Mortgage demand from homebuyers dwindled for the week ending July 21 as borrowers backed off amid a housing market that remains unaffordable for many.
The Market Composite Index – a measure of mortgage application volume – was down 1.8% on a seasonally adjusted basis from a week ago, the Mortgage Bankers Association said today. When unadjusted, the index was down 1.5% compared with the previous week.
“Mortgage rates were essentially flat last week but remained high, with the 30-year fixed staying at 6.87% and contributing to a pullback in mortgage applications,” said Joel Kan, MBA’s deputy chief economist.
MBA’s refinance index slipped 0.4% from the prior week. The seasonally adjusted purchase index fell 3% to its lowest level in over a month. Kan said the decline in purchase activity was partly driven by a 10% decrease in FHA applications, which decreased nine basis points to 12.7%.
“The decrease in FHA purchase applications contributed to an increase in the overall average purchase loan size to $432,700, its highest level since the end of this May,” he added. “Refinance applications remained lackluster, running 30% behind year-ago levels. Many borrowers remain on the sidelines given current rates and persistent affordability challenges.”