Applications remain sensitive to mortgage rates.
Mortgage application volume decreased for the second time in three weeks as rates edge up ahead of the spring home buying season, the Mortgage Bankers Association reported Wednesday.
Home loan applications fell 7.7% week over week as the 30-year mortgage rate increased 21 basis points to 6.39%, according to data from MBA’s Market Composite Index.
“Mortgage rates increased across the board last week, pushed higher by market expectations that inflation will persist, thus requiring the Federal Reserve to keep monetary policy restrictive for a longer time,” said MBA deputy chief economist Joel Kan.
Refinance application activity was down by 13% from the previous week, and purchase application volume dropped 6% on a seasonally adjusted basis.
“Refinance borrowers, both rate/term and cash-out, remain on the sidelines as current rates provide little financial incentive to act,” Kan said. “Purchase applications dropped to their lowest level since the beginning of this year and were more than 40% lower than a year ago.”
Potential buyers, Kan noted, “remain quite sensitive to the current level of mortgage rates, which are more than two percentage points above last year’s levels and have significantly reduced buyers’ purchasing power.”
The refinance share of application activity declined 1.9% to 32%, while the adjustable-rate mortgage share of activity rose to 6.9% of total applications.