Rising interest rates lead to slower mortgage application activity
Mortgage application activity took a hit last week as rates moved higher, according to the Mortgage Bankers Association’s (MBA) latest weekly applications survey.
Mortgage loan application volume fell 2.6% on a seasonally adjusted basis from the previous week, MBA’s Market Composite Index showed. On an unadjusted basis, the Index rose 8% compared to the previous week.
The slight decline comes as interest rates edged up despite some hope for a Federal Reserve rate cut later this year. The average interest rate for a 30-year fixed-rate mortgage inched up, reaching 7.03% from 6.93%.
“Mortgage rates moved higher last week, crossing the 7% mark, even as the latest inflation data has kept market expectations alive for a rate cut from the Fed later this year,” Mike Fratantoni, senior vice president and chief economist at MBA, said in the survey report.
Both refinance and purchase applications saw declines. MBA’s refinance index decreased by 2% from the previous week, although it remained 29% higher than the same week one year ago. The seasonally adjusted purchase index fell by 3% from the previous week.
“Purchase applications decreased the final full week of June, even as both new and existing inventories have increased over the past few months,” Fratantoni said. “Refinance activity also remains subdued – although there was a slight increase in applications for conventional refinance loans.”
The refinance share of mortgage activity increased slightly to 35.7% of total applications from 35.1% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6% of total applications.
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Government loan programs saw mixed results. The FHA share of total applications remained unchanged at 13.1%, while the VA share decreased to 12.9% from 13.8%. The USDA share of total applications slightly decreased to 0.3% from 0.4%.
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