Both types of applications posted declines
Mortgage application activity declined for the second consecutive week, hitting its lowest level since the start of 2020.
Even though mortgage rates edged down from last week, mortgage apps fell 1.8% on a seasonally adjusted basis, according to the Mortgage Bankers Association. Both purchase and refinance applications also decreased. MBA’s refi index dropped 2% week over week, while the purchase index dipped 1% from the week prior.
“Treasury yields have been volatile despite mostly positive economic news, including last week’s June jobs report, which showed ongoing improvements in the labor market,” said Joel Kan, AVP of economic and industry forecasting at MBA. “However, rates continued to move lower – especially late in the week. The 30-year fixed-rate was 11 basis points lower than the same week a year ago, but many borrowers previously refinanced at even lower rates. Refinance applications have trended lower than 2020 levels for the past four months.”
Kan added that accelerated home price growth, fueled by insufficient housing supply, is weighing on the purchase market and is pushing average loan amounts higher.
The refinance share of mortgage activity saw a three basis point drop to 61.6% of total applications. Likewise, the adjustable-rate mortgage (ARM) share of activity decreased to 3.3% of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased from 3.20% to 3.15%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) also dwindled, down from 3.23% to 3.20%.