Mortgage applications decreased last week as rates hovered near 7%.
The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – decreased by 1.18%, wiping out last week’s 1.1% bump.
Adjusted purchase applications fell by 3%, while the unadjusted index dipped 2% from the week before and 23% lower YOY.
The average interest rate for 30-year fixed loans remained the same as last week at 6.87%, driving the decline in activity.
The FHA share of total applications saw the biggest change, down nearly 10 bps.
These applications fell to a 12.7% share from 13.6%, with an average interest rate of 6.80%, up from 6.77%.
FHA loans tend to do well when affordability is low thanks to their low down payment requirements and minimum closing costs. But even those who qualify appear to be taking a step back.
“The 2.5% decline in purchase activity, partly driven by a 10% decrease in FHA applications, pushed the purchase index to its lowest level in over a month. The decrease in FHA purchase applications contributed to an increase in the overall average purchase loan size to $432,700, its highest level since the end of this May,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
“Refinance applications remained lackluster, running 30% behind year-ago levels. Many borrowers remain on the sidelines given current rates and persistent affordability challenges.”
Refinances slipped by just 0.4%, but remain 30% lower than the same time last year, making up 28.7% of total applications.
In the past decade, refis averaged 58% of total activity.
Most homeowners still have rates under 5% and won’t be tempted to refinance, let alone move, until both prices and rates come down. But how quickly that might happen is still up in the air.
The FOMC is expected to raise interest rates again at its meeting before pausing to assess the economy’s strength. A press conference is scheduled for this afternoon.
The VA share of total applications remained unchanged at 12.1%, while the USDA share remained unchanged at 0.5%.
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