Activities remain hampered by high mortgage rates, says MBA.
Mortgage applications were down 5.4% from the previous week, according to data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications for the week ending July 1, which was adjusted to account for early closings the Friday before Independence Day.
Measuring mortgage loan application volume, the MBA’s market composite index decreased 5.4% on a seasonally adjusted basis compared to last week. Unadjusted, this was a 6% increase from a week ago.
Refinancing and prepayment activity was down 8% from the previous week and 78% lower than what was reported in the same week last year, while purchases for single-family homes dropped 4% from a week ago.
Joel Kan, MBA’s associate vice president of economic and industry forecasting, explained that these drops were due to mortgage rates remaining higher than they were a year ago, even with rate hikes stalling over the last two weeks.
“Purchase activity is hamstrung by ongoing affordability challenges and low inventory, and homeowners still have reduced incentive to apply for a refinance,” said Kan.
The refinance share of activity accounted for 29.6% of total applications, sliding down from the 30.3% reported last week. Similarly, the adjustable-rate mortgage (ARM) share of activity decreased to 9.5% of total applications.
The week’s FHA share of total applications stayed at 12%, just as the USDA share remained at 0.6%. The VA share, meanwhile, dropped to 11.1% from 11.2% the week prior.
Finally, the weekly average contract rates for different types of loans saw the following changes, with effective rates decreasing across the board: