Purchase applications fell 3% last week, according to a report from the Mortgage Bankers Association. This marks the first decline for purchase applications in 10 weeks following the highest level of purchase applications in over 11 years the week prior.
According to the report, mortgage applications decreased 8.7% from last week. Applications for refinancings dropped to their lowest level in three weeks after they fell 12% from the previous week. However, that is still 76% higher year-over-year, according to the report.
“Even with high unemployment and economic uncertainty, the purchase market is strong. Activity has climbed above year-ago levels for five straight weeks and was 18% higher than a year ago last week,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
The refinance share of mortgage activity fell to 61.3% of total applications from 63.2% the week prior. But, the MBA is anticipating refinance originations to increase to $1.35 trillion in 2020 – putting it at the highest level since 2012, according to the report.
“One factor that may potentially crimp growth in the months ahead is that the release of pent-up demand from earlier this spring is clashing with the tight supply of new and existing homes on the market. Additional housing inventory is needed to give buyers more options and to keep home prices from rising too fast,” Kan said.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 3.3% – the lowest level in survey history, according to the report.
Here is a more detailed breakdown of this week’s mortgage application data:
- The FHA’s share of mortgage apps increased to 11.4% from 11%.
- The VA share of applications fell to 11% from 11.5%.
- The USDA share of total applications remained unchanged at 0.7%
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) fell to 3.62% from 3.67%.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.35% from 3.33%.
- The average contract interest rate for 15-year fixed-rate mortgages increased to 2.81% from 2.80%.
- The average contract interest rate for 5/1 ARMs increased to 3.09% from 3.07%