One area takes a particularly large hit…
Mortgage activity in the US continued to slide last week, with applications decreasing by 5.6% compared to the previous week, the Mortgage Bankers Association (MBA) reported today.
The MBA’s Market Composite Index, which tracks mortgage loan application volume, fell 5.6% on a seasonally adjusted basis. Refinance applications dropped 7% from the previous week and were down 1% year-over-year. Purchase applications also decreased by 5%, down 12% compared to the same period last year.
The slump was driven by rising interest rates, which are particularly impacting those seeking government-backed FHA and VA refinance loans, according to MBA chief economist Mike Fratantoni.
“Mortgage rates were little changed last week, with the 30-year conforming rate declining slightly to 7.04% but remaining about a quarter percentage point higher than the start of the year,” Fratantoni said in the weekly report. “Higher rates in recent weeks have stalled activity, and last week it dropped more for those seeking FHA and VA refinances.”
Frantantoni noted that purchase applications continued to show some signs of resilience, with new home purchase interest up 19% year-over-year. However, rising rates continue to be a major hurdle for would-be buyers. FHA and VA borrowers, who often rely on these programs for their affordability advantages, are feeling the squeeze especially hard.
“This disparity continues to highlight how the lack of existing inventory is the primary constraint to increases in purchase volume. However, mortgage rates above 7% sure don’t help,” he added.
Read next: Is the plus-5% mortgage rate environment here to stay?
The share of refinancing in the total mortgage applications decreased to 31.2%, down from 32.6% the week before. On the other hand, adjustable-rate mortgages (ARMs) increased to 7.5% of all applications, suggesting borrowers are looking for different ways to navigate the current high-rate environment.
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