Mortgage applications decreased despite mortgage rates falling for the third week in a row, indicating high prices and low inventory, said Joel Kan, MBA associate vice president of economic and industry forecasting.
“Even with a few weeks of lower rates, most borrowers have likely already refinanced, which is why activity has decreased in seven of the last eight weeks,” Kan said. “The purchase market’s recent slide comes despite a strengthening economy and labor market. Activity is still above year-ago levels, but accelerating home-price growth and low inventory has led to a decline in purchase applications in four of the last five weeks.”
Many economists aren’t expecting a slowdown in prices or demand.
The refinance index decreased 1%, and the seasonally adjusted purchase index also decreased — down 5% — from one week earlier. The unadjusted purchase index decreased 4% compared with the previous week, but was still 34% higher than the same week one year ago. However, numbers from this time last year reflect challenges brought on by the pandemic.
The refinance share of mortgage activity increased to 60.6% of total mortgage applications from 60% the previous week.
The FHA share of total mortgage applications decreased to 10.7% from 11.3% the week prior. However, the VA share of total applications increased to 12.2% from 11.5% the week prior.
Here is a more detailed breakdown of this week’s mortgage application data:
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.17% from 3.2%
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased to 3.28% from 3.34%
- The average contract interest rate for 30-year fixed-rate mortgages decreased to 3.12% from 3.15%
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.55% from 2.65%
- The average contract interest rate for 5/1 ARMs decreased to 2.59% from 2.67%