Some "applications are expected to remain depressed".
US mortgage applications dropped for the second consecutive week despite a sharp decline in mortgage rates, the Mortgage Bankers Association said Wednesday.
Seasonally adjusted mortgage application volume dipped 1.7% for the week ending July 8, according to MBA’s weekly survey. Unadjusted, applications were down 13% from the previous week.
Purchase loan applications posted a seasonally adjusted 4% decrease and 14%, when unadjusted, from the previous week. Joel Kan, MBA’s associate vice president of economic and industry forecasting, said applications for purchase loans continue to be weaker due to the combination of much higher mortgage rates and the worsening economic outlook.
Kan also noted that purchase loan size shrank from its record high a few months ago.
“After reaching a record $460,000 in March 2022, the average purchase loan size was $415,000 last week, pulled lower by the potential moderation of home-price growth and weaker purchase activity at the upper end of the market,” he said.
On the other hand, refinance applications edged up 2% week over week. Consequently, the refi share of mortgage activity increased from 29.6% to 30.8% of total applications. By dollar volume, refinance applications were up 0.3%, according to Fannie Mae.
“Refinance applications increased slightly last week, driven by an uptick in conventional and FHA refinances. The overall refinance index remained 5% below the average level reported in June,” Kan said. “With the 30-year fixed rate 265 basis points higher than a year ago, refinance applications are expected to remain depressed.”