Mortgage applications dip as rates increase before Memorial Day
Mortgage applications dropped by 5.7% heading into Memorial Day weekend, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 24.
The Market Composite Index, a measure of mortgage loan application volume, decreased 5.7% on a seasonally adjusted basis from the previous week. On an unadjusted basis, the index saw a 6.3% decline.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose to 7.05%, while all other loan types also saw increases.
“Mortgage rates increased for the first time in four weeks. The uptick in rates led to a decline in mortgage applications heading into Memorial Day weekend,” said Joel Kan, vice president and deputy chief economist of MBA.
Both purchase and refinance applications fell, pushing overall activity to its lowest level since early March.
The refinance index plunged 14% from the previous week, while the purchase index dipped by 1%. This decline in purchase applications is partially due to the limited supply of existing homes for sale and the challenges buyers face finding listings within their budget that meet their needs, according to Kan.
“Both purchase and refinance applications fell, pushing overall activity to the lowest level since early March,” he explained. “Borrowers remain sensitive to small increases in rates, impacting the refinance market and keeping purchase applications below last year’s levels. There continue to be limited levels of existing homes for sale, and many buyers are struggling to find listings in their price range that meet their needs.”
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The refinance share of mortgage activity decreased to 31.3% from 34% the previous week. The adjustable-rate mortgage (ARM) share also fell to 6.4%.
Applications for FHA loans decreased one basis point to 12.7%, while VA loan applications fell to 12% from 13.7%. However, USDA loan applications inched up one basis point to 0.4%.
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