Applications fall again as homebuyers grapple with steep rates.
Mortgage demand cooled for the fourth week in a row as interest rates hover near record highs, according to the Mortgage Bankers Association.
Mortgage application volume was down 1.4% during the week ending June 2 – seasonally adjusted for the Memorial Day holiday. When unadjusted, applications plunged 12% week over week. Demand for home loans declined despite a drop in rates, MBA deputy chief economist Joel Kan noted.
“The 30-year fixed rate dipped to 6.81%, 10 basis points lower than last week but still the second highest rate of 2023,” Kan said in MBA’s news release. “Overall applications were more than 30% lower than a year ago, as borrowers continue to grapple with the higher rate environment.”
MBA’s refinance index decreased 1%, and the purchase index decreased 2% from the previous week. On the other hand, the refinance share of mortgage activity increased six basis points to 27.3% of total applications.
Applications for FHA loans increased to 13.2% from 12.7% the week before. The VA share rose to 12.5% from 12.1%, while the portion of USDA loan applications slipped to 0.4% from 0.5% the week prior.
“Purchase activity is constrained by reduced purchasing power from higher rates and the ongoing lack of for-sale inventory in the market, while there continues to be very little rate incentive for refinance borrowers,” Kan said. “There was less of a decline in government purchase applications last week, which was consistent with a growing share of first-time home buyers in the market.”