Applications slump after Memorial Day break
Mortgage application volumes fell last week as rates on 30-year loans climbed to their highest level in nearly a month.
The Mortgage Bankers Association’s weekly survey showed applications for the week ending May 31 decreased 5.2% on a seasonally adjusted basis from the prior week after adjusting for the Memorial Day holiday. On an unadjusted basis, applications plunged 16%.
The average rate on a 30-year fixed-conforming mortgage rose to 7.07% from 7.05% the prior week, reaching its highest point since early May despite signs of moderating economic growth.
“Mortgage rates moved slightly higher last week, with the 30-year conforming rate reaching 7.07% – its highest level since early May – despite incoming data indicating somewhat slower economic growth,” said Mike Fratantoni, MBA’s senior vice president and chief economist.
The refinance index fell 7% for the week but was still 5% higher than the same week a year ago. The seasonally adjusted purchase index decreased 4% from the previous week.
“After adjusting for the Memorial Day holiday, both purchase and refinance application volumes were down, with purchase activity specifically 13% below last year’s level,” Fratantoni added.
Read next: How serious a problem is housing affordability in the US?
The refinance share slipped to 31.1% of total applications, while the adjustable-rate mortgage share increased to 6.7%.
Government-backed loan applications fared slightly better, with FHA and VA applications seeing growth.
The FHA share of total applications rose to 13.2% from 12.7% the week prior, while the VA share increased to 12.1% from 12.0%. The USDA share of total applications decreased one basis point to 0.3%.
“Government purchase volume was down less, helped by growth in VA applications. The market is relying on first-time homebuyer demand, and many first-time buyers do use government lending programs,” Fratantoni said.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
