Applications Rise, But Not For The Long Haul

Mortgage applications spiked after a few tough weeks on lower mortgage rates, though the bump didn’t last long.
The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index — a measure of mortgage loan application volume — jumped by 15.6%, reversing last week’s 5.2% dip.
Adjusted purchase applications increased by 9%, while the unadjusted index was up 19% and 12% lower YOY.
Rates started last week down, though they climbed later in the week on less-than-ideal employment data. That early low point encouraged some borrowers to move quickly, however. The 30-year fixed rate averaged 7.02%, a decline.
“Lower rates earlier in the week meant a strong increase in refinance activity, particularly for VA borrowers, who jumped on the chance to lower their rates,” said Mike Fratantoni, MBA’s SVP and Chief Economist.
Refinances were up 28% both YOY and from the week prior. They accounted for 35.2% of applications, an increase.
“On a seasonally adjusted basis and compared to the holiday-adjusted level from the prior week, purchase activity also increased. Multiple data sources are now indicating that home inventory levels, while still historically low, are up significantly from last year at this time. This is good news for many prospective homebuyers who have been frustrated by the lack of homes on the market,” Fratantoni continued.
Inventory is accumulating as more sellers list and fewer buyers pounce, reducing the for-sale deficit created during the pandemic. New listings outpaced sales in May, according to Zillow.
Inflation and rates persistently in the 7% range have pushed homeownership out of reach for many Americans, especially younger buyers.
As a result, more homes are sitting on the market for at least 30 days without going under contract, making them “stale” listings.
“If these trends hold, we’re likely to see price growth flatten or tick down over the next year,” Orphe Divounguy, Zillow senior economist, commented.
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