After two consecutive weeks of increases, mortgage applications decreased 6.9% in the week ending June 25, 2021, according to the latest report from the Mortgage Bankers Association.

Mortgage applications had increased 2.1% and 4.2% in the previous two weeks, respectively.

The 6.9% dip brought application volume to its lowest level in almost 18 months, according to Mike Fratantoni, MBA’s senior vice president and chief economist. Purchase applications for conventional loans also declined to its lowest level since May 2020.

“Mortgage rates were volatile last week, as investors tried to gauge upcoming moves by the Federal Reserve amidst several divergent signals — including rising inflation, mixed job market data, strong consumer spending, and a supply-constrained housing market that has led to rapid home-price growth,” Fratantoni said.

“As the economy progresses and inflation remains elevated, we expect that rates will continue to gradually rise in the second half of the year,” added Sam Khater, Freddie Mac’s chief economist. “For those homeowners who have not yet refinanced – and there remain many borrowers who could benefit from doing so – now is the time.”

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The refinance share of activity decreased to 61.9% of total mortgage applications from 62.5% the previous week. On an unadjusted basis, the market composite index decreased 7% compared with the previous week. The seasonally adjusted purchase index also decreased 5% from one week earlier.

The FHA share of total mortgage applications remained unchanged at 9.5% from the week prior, and the VA share of total mortgage applications also decreased to 10.5% from 11.2%.

Here is a more detailed breakdown of this week’s mortgage applications data:

• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) rose to 3.20% from 3.18%
• The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased to 3.23% from 3.26%
• The average contract interest rate for 30-year fixed-rate mortgages decreased to 3.19% from 3.21%
• The average contract interest rate for 15-year fixed-rate mortgages also decreased to 2.56% from 2.58%
• The average contract interest rate for 5/1 ARMs increased to 2.98% after remaining unchanged for the last two weeks at 2.69%, with points decreasing from 0.26 (including the origination fee) for 80% LTV loans