Number of homeowners who stand to benefit from a refinance also declines
An uptick in mortgage rates caused applications to fall 3.9% for the week ending August 13, according to data from the Mortgage Bankers Association’s survey.
“Mortgage rates were at their highest levels in around a month, with the 30-year fixed rate increasing above 3% to 3.06%,” said Joel Kan, associate vice president of economic and industry forecasting at MBA. “Mortgage rates followed an overall increase in Treasury yields last week, which started higher from the strong July jobs report before slowing because of weaker consumer sentiment and concerns about rising COVID-19 cases.”
MBA’s Market Composite Index dropped 3.9% on a seasonally adjusted basis and 4% on an unadjusted basis from a week ago. Refinance applications posted a 5% drop from the previous week and was 8% lower than the same week last year. Meanwhile, purchase applications dipped 1% week over week.
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Kan also noted that the pool of eligible homeowners who can benefit from a refinance had shrunk. The refi share of mortgage activity dwindled from 68% to 67.3% of total applications.
“Purchase applications also saw mixed results, with conventional purchase applications down and government purchases up. Government purchase loans, such as FHA loans are typically popular with first-time buyers. Despite a second-straight weekly decrease, average loan sizes remain close to record highs. This is a continuing sign that sales prices are still elevated, driven by stiff competition leading to accelerating home-price growth,” Kan said.
