Interest rates hit three-month low, spurring modest application growth
Mortgage applications in the United States increased for the third week in a row, according to the latest data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending June 21.
The report, which includes an adjustment for the Juneteenth holiday, showed a modest uptick in mortgage demand despite ongoing challenges in the housing market.
MBA’s Market Composite Index, a measure of mortgage loan application volume, rose 0.8% on a seasonally adjusted basis from the previous week. However, on an unadjusted basis, the index decreased by 10% compared to the week before.
“Mortgage rates were mostly lower last week, with the 30-year fixed rate declining slightly to 6.93%, the lowest level in more than three months,” Joel Kan, vice president and deputy chief economist at the MBA, said in the report. “Lower rates, however, were still not enough to entice refinance borrowers back, as most continue to hold mortgages with considerably lower rates.”
The refinance index remained essentially unchanged from the previous week but was 26% higher than the same week one year ago. Meanwhile, the seasonally adjusted purchase index increased by 1% week-over-week. On an unadjusted basis, purchase applications decreased by 10% compared to the previous week and was 13% lower than the same week one year ago.
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Kan highlighted a positive trend in government-backed loans, saying, “Purchase applications did see a small increase after adjusting for the Juneteenth holiday. Government purchase loans, primarily FHA and VA, saw gains of more than 2% over the previous week, as homebuyers in those segments sought to take advantage of the recent rate relief.”
The refinance share of mortgage activity slightly decreased to 35.1% of total applications from 35.2% the previous week. The adjustable-rate mortgage (ARM) share increased to 6.1% of total applications.
Government loan programs saw some shifts, with the FHA share of total applications increasing to 13.1% from 12.7% the week prior. The VA share decreased to 13.8% from 14.8%, while the USDA share remained unchanged at 0.4%.
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