Mortgage applications tumbled in the latest report from the Mortgage Bankers Association, falling back down as if Brexit never happened.
For the week ending July 22, mortgage applications decreased 11.2% from one week earlier, the Mortgage Bankers Association’s Weekly Mortgage Applications Survey posted
Broken up, the Refinance Index decreased 15% from the previous week, while the seasonally adjusted Purchase Index decreased 3% from one week earlier to the lowest level since February 2016.
The news, however, comes as no surprise.
Shortly after Brexit hit the market, Capital Economics put out a report saying that the United Kingdom’s decision to leave the European Union will have no more effect on the housing market and no more impact on mortgage rates.
As a result, this news of applications dropping appears to be a continued trend from the past several reports, only this time it tumbled.
Before Brexit, mortgage applications were on a downward trend and declined 2.4% from the prior week despite record low interest rates, according to the MBA survey.
Then the U.K. voted to leave the European Union and mortgage applications surged14.2%, significantly driven by refinance activity, according to the MBA.
The next week the trend continued as mortgage applications increased by 7.2% from the previous week, according to the MBA.
But then last week’s report found that purchase applications actually surged in the latest report, rising 23% compared with the previous week. And mortgage applications over all fell 1.3%.
Now in this most recent report, both refinance and purchase are down.
The refinance share of mortgage activity dropped to 61.1% of total applications from 64.2% the previous week. The adjustable-rate mortgage share of activity decreased to 4.7% of total applications.
The Federal Housing Administration’s share of total applications increased to 10.1% from 9.9% the week prior. The Veteran Affairs’ share of total applications increased to 11.9% from 11.2% the week prior. The United States Department of Agriculture’s share of total applications increased to 0.6% from 0.5% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.69% from 3.65%.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 3.67% from 3.66%.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.56% from 3.53%.
The average contract interest rate for 15-year fixed-rate mortgages increased to 2.94% from 2.90%, while the average contract interest rate for 5/1 ARMs increased to 2.96% from 2.86%.