Applications Stagnant Ahead Of Inauguration

Mortgage applications were basically stagnant last week despite a bump in purchase volume.

The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index — a measure of mortgage loan application volume — increased by just 0.1% last week, effectively stalling after a 33.3% jump the week prior.

Though buyers have made moves despite high rates, the psychological barrier of 7% and up has slowed demand. Rates were down last week to 7.02% from 7.09%, but home shoppers didn’t act on the decline.

Adjusted purchase applications increased by 1%, while the unadjusted index was up 7% but 2% lower year-over-year.

“Mortgage application volume was little changed last week, but there was a small increase in conventional purchase volume, which brought the level of total purchase volume up almost 2% above last year at this time,” said Mike Fratantoni, MBA’s SVP and Chief Economist. 

“Mortgage rates remained near 7%, a key psychological level, which likely continues to slow the pace of activity for both refinances and purchases. Incoming economic data are likely to keep the Federal Reserve on hold for now, while uncertainties about economic policy are likely to keep longer-term rates, including mortgage rates, steady at these levels.”

Refi applications took a hit, down 3% on the week, though they remain 42% higher year-over-year. Their share of mortgage activity fell to 40.4% of total applications.

Demand may increase as rates keep moderating. Markets breathed a sigh of relief after Trump’s inaugural executive order on tariffs turned out milder than expected.

The action signed Monday directed various agencies to analyze trade with Canada and Mexico but did not implement the 25% tariffs Trump promised while campaigning.

But truly affordable rates will remain a thing of the past.

“If what you’re hoping or wishing for is an interest rate at 4%, or housing prices to drop 20%, I personally don’t think either one of those things is remotely likely in the near term,” Lee Baker, an Atlanta financial planner, told CNBC.