This week's drop reverses increases in previous weeks.
Refinance application activity has now shed 80% from its pandemic high due to rising mortgage rates and the negative impact of inflation.
For the week ending August 12, 2022, the dollar volume of refinance applications fell 6% from the previous week, Fannie Mae’s Refinance Application-Level Index (RALI) revealed. Year over year, RALI dollar volume was down by 75.4%, and its four-week average dipped by 0.1%.
“Refinance application activity decreased last week, reversing recent increases,” said Fannie Mae chief economist Doug Duncan. “As mortgage rates moved higher this year, refinance activity has decreased and is now down by over 80% from its peak level during the refinance boom in the third quarter of 2020.”
However, refinance dollar volume was up by 34.4% compared to the refi slowdown in the fourth quarter of 2018. The RALI count registered a 5.1% week-over-week drop and was down 74.3% compared to the same week a year ago.
According to Joel Kan, AVP of economic and industry forecasting at the Mortgage Bankers Association, home loan applications remained “held down by rapidly drying up demand, as high mortgage rates, challenging affordability, and a gloomier outlook of the economy kept buyers on the sidelines.”
“However, if home price growth slows more significantly and mortgage rates move lower, we might see some purchase activity return later in the year,” Kan said.