Fewer applications show borrowers’ demand for mortgage loans fell this week, despite a decline in rates due to concerns of an economic recession, according to the Mortgage Bankers Association (MBA).
The survey, which includes adjustments to account for the long Fourth of July weekend, shows mortgage applications down 5.4% for the week ending July 1, compared to a week earlier.
“Mortgage rates decreased for the second week in a row, as growing concerns over an economic slowdown and increased recessionary risks kept Treasury yields lower,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. But he added: “Rates are still significantly higher than they were a year ago, which is why applications for home purchases and refinances remain depressed.”
The Refinance Index decreased 7.7% from the previous week and was 76% lower than the same week one year ago, as homeowners still have reduced incentive to apply for the product.
The seasonally adjusted Purchase Index fell 4.3% from the previous week and 7.8% compared to the same week in the previous year because borrowers face an ongoing affordability challenge and a low inventory problem.
The trade group estimates the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) decreased to 5.74%, from 5.84% the previous week, falling 24 basis points during the past two weeks. Jumbo mortgage loans (greater than $647,200) went from 5.42% to 5.28%.
Refis were 29.6% of total applications last week, decreasing from 30.3% the previous week, the survey shows.
The adjustable-rate mortgages (ARM) share of applications declined from 10.1% to 9.5%, still demonstrating continued popularity among borrowers. According to the MBA, the average interest rate for a 5/1 ARM fell to 4.62% from 4.64% a week prior.
The FHA share of total applications remained unchanged at 12%. Meanwhile, the V.A. share went from 11.2% to 11.1%. The USDA share of total applications remained at 0.6%.
The survey, conducted weekly since 1990, covers 75% of all U.S. retail residential mortgage applications.