Dip In Purchase And Refinance Applications

According to the latest reading from the Mortgage Bankers Association in almost a year and a half, the mortgage application volume has dipped to its lowest level with significant drops in both refinance and purchase activity.

For the week ending June 25, there is a drop of 6.9% in the overall mortgage applications week over week. 

There is a post of 8% decrease in MBA’s refi index, the share of total applications dropped from 62.5% to 61.9%.  

The purchase index too was down 5% from the previous week and was 17% lower than the same time last year.

Mike Fratantoni the chief economist at MBA said that the recent fluctuations in rates, along with other economic factors are the cause of the decline.

Fratantoni said, last week the mortgage rates were volatile when the investors tried to gauge upcoming moves by the Federal Reserve in between several divergent signals, including rising inflation, mixed job market data, strong consumer spending, and a supply-constrained housing market which caused rapid home-price growth. 

He added that the purchase applications for conventional loans declined to the lowest level last week since May 2020. 

The average loan size for total purchase applications increased, showing that first-time homebuyers, who qualify for smaller loans, will get thrown out of the market because of the lack of entry-level homes for sale.

There was a dip of 3.6% in adjustable-rate mortgage (ARM) share of activity of total applications, however, the FHA held steady at 9.5%. 

There was a decrease in VA share of total applications by seven basis points to 10.5%, and no change in the USDA share of total applications at 0.5% since the previous week.

There was an increase from 3.18% to 3.20% in the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $548,250 or less, while the contract interest rate decreased to 3.23% from 3.26% for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250).