Loan App Volume Dips To Lowest Level Since February 2000

Mortgage loan application volume fell by another 1.8%, the fourth straight week of declines and the lowest level of activity since February 2000, the Mortgage Bankers Association’s weekly survey shows.

The adjusted Market Composite Index, a measure of mortgage loan application volume, decreased by 1.8%. The adjusted purchase index dropped 1%, while the unadjusted purchase index decreased by 0.4%% and was 18% lower YOY.

The refinance index fell by 4% and made up 30.7% of total applications, down 83% from the same time last year. 

ARM activity dropped to 9.1% of total applications. 

As affordability challenges continue and potential buyers decide to hold off searching for a home, purchase activity is now inching closer to pre-pandemic levels.

“Weakening purchase applications trends in recent months have been consistent with data showing a slowdown in sales for newly constructed homes and existing homes. A potential silver lining for the housing market is that stabilizing mortgage rates and increases in for-sale inventory may bring some buyers back to the market during the second half of the year,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

“With mortgage rates remaining well over 5%, refinance applications are now 83% below last year’s pace.”

Inventory is rebounding as competition cools, offering some relief to dedicated buyers who are still looking to buy despite interest rate hikes.

“Our June Housing Trends Report shows that housing inventory has made the biggest about-face ever in a one year period of time, rising 18.7% over this time last year,” said chief economist Danielle Hale.

However, inventory remains below pre-pandemic levels and homes are still selling more quickly than in the past.

The FHA share of total applications fell from 12.4% to 12.1%. The VA share and USDA share of total applications remained unchanged at 10.6% and 0.6%, respectively.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased from 5.82% to 5.74%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances fell from 5.31% to 5.32%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased from 5.50% to 5.54%, and for 5/1 ARMs rose to 4.67% from 4.60%.