Demand is relatively stable despite economic uncertainty, expert says
Lower mortgage rates drove a rise in applications last week.
The Mortgage Bankers Association’s Weekly Mortgage Applications Survey showed that mortgage applications rose 26.8% on a seasonally-adjusted basis and 38% unadjusted from the previous week.
"Mortgage rates for all loan types fell by a sizeable margin for the second straight week, pulled down by trade tensions with China and Mexico, the financial markets reacting to more bearish communication from several Fed officials, and weaker than expected hiring in May," said Joel Kan, associate vice president of economic and industry forecasting at MBA.
The Refinance Index and the refinance share of mortgage activity climbed even higher, up 47% and 49.2% of total applications from 42.2% the week before. The seasonally-adjusted Purchase Index also went up 10% on an adjusted bases and 20% on an unadjusted basis.
"Despite the less positive outlook, both purchase and refinance applications surged, driven mainly by these lower rates. The refinance index jumped 47% to its highest level since 2016," Kan said.
The adjustable-rate mortgage (ARM) share of activity grew to 7.9% of total applications. Meanwhile, the FHA share of total applications fell to 8.9% from 9.5% the week prior. The VA share of total applications decreased to 11% from 11.3% the week prior. The USDA share of total applications did not budge from 0.6% the week prior.
"With the 30-year fixed-rate mortgage at its lowest level since September 2017, purchase activity was more than 10% higher than a year ago,” Kan said. “Demand is still relatively strong, but there is likely restraint from some prospective buyers, driven by some economic uncertainty. Furthermore, housing supply is still very tight for first-time buyers."
