Mortgage applications fell 2.5% for the week ending Aug. 31 as credit conditions remained tight, stalling robust buyer and refinancing activity.
Interest rates also continued to decline with the 30-year, fixed-rate mortgage with a conforming loan balance falling to 3.78% from 3.80% a week earlier, the Mortgage Bankers Association said.
Interest rates and application filings also declined the previous week, setting a precedent that has housing analysts worried.
“Mortgage applications for home purchases fell sharply in August, providing further evidence that mortgage-dependent buyers are barely contributing to the recovery in the housing market activity,” Capital Economics said in a report. “Without a significant easing in credit conditions, it’s hard to see how this will change in the foreseeable future.”
Refinancing activity cooled falling 3% from the previous week, the lowest level since May. Meanwhile, the purchase index fell 0.8%.
The 30-year, FRM on jumbo loans also fell to 4.05% from 4.06%, and the 30-year, FHA loan declined to 3.54% from 3.60% a week earlier.
The refinance share of mortgage activity remained unchanged at 79%, while ARM activity grew to 5% of all loan applications.
The average interest rate on a 15-year, FRM declined to 3.10% from 3.12%, the MBA said. In addition, the average contract interest rate for 5/1 ARMs fell to 2.64% from 2.68%.