Declining interest rates haven't boosted activity
Mortgage demand continued to slow last week, with applications reaching their lowest level since the start of the year - even as interest rates inched lower.
The latest Mortgage Bankers Association (MBA) weekly mortgage applications survey for the week ending February 14 showed a seasonally adjusted basis 6.6% drop from the prior week. On an unadjusted basis, loan applications were down 4%.
The 30-year fixed mortgage rate fell slightly to 6.93% from 6.95% the previous week, but this was not enough to drive demand.
“Mortgage rates decreased on average over the week, as markets brushed off unexpectedly strong inflation data,” said MBA deputy chief economist Joel Kan. “Despite mortgage rates declining… mortgage applications decreased to their slowest pace since the beginning of the year.”
Refinance applications fell 7% from the previous week but remained 39% higher than the same time last year. Purchase loan applications declined 6% week-over-week on a seasonally adjusted basis, and dropped 1% on an unadjusted basis. Still, purchase apps were 7% higher than a year ago.
The refinance share of total mortgage activity also declined, slipping to 38.7% from 40.2% the week before. The adjustable-rate mortgage (ARM) share of applications dropped slightly to 5.4%.
With mortgage rates still hovering close to 7%, many buyers seem to be waiting for further rate drops before making a move.
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“Purchase applications were down for the week, as buyers remained on the fence,” Kan said. However, he added that looser inventory conditions could help drive more activity in the coming months.
Government-backed mortgage applications showed minor shifts, with FHA loans increasing to 16.6% of total applications, up from 16.0%. Meanwhile, VA loans dropped slightly to 14.2% from 14.6%, and USDA loans edged up to 0.6% from 0.5%.
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