Despite no change in historically low mortgage rates, mortgage applications dropped 2.4% last week, according to the Mortgage Bankers Association’s Weekly Mortgage Application Survey.
The MBA said the decline in its seasonally adjusted market composite index tracking mortgage applications was influenced by a 3.8% decline in applications to refinance existing loans.
“There was little change in mortgage rates last week, with the 30-year fixed remaining at 3.03 percent. Despite low rates, refinance applications declined, with some borrowers still waiting for rates to drop even lower,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“Recent uncertainty around the economy and pandemic have kept rates low over the past month, which is why the refinance index has oscillated around these levels.”
The slowdown in applications last week coincides with a cooling off in the housing market, brought on by slowly increasing inventory and sticker shock, according to a recent Redfin report.
“For the first time in over a year, homebuyers don’t need to feel rushed,” said Redfin Chief Economist Daryl Fairweather. “Although the market still feels tight and competitive, the number of homes for sale keeps creeping up as more homes are listed. Those home sellers are adjusting their price expectations or seeing their homes sit on the market.”
“There could be even more listings coming on the market as mortgage forbearance ends and homeowners with missed payments decide to sell. And mortgage rates remain near all-time lows with no signs of an increase on the horizon.”
Additional highlights from the Weekly Mortgage Application Report:
- Refinance activity decreased to 66.8% of total applications from 67.3%
- The adjustable-rate mortgage (ARM) activity increased to 3.2% of total applications
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) held at 3.03%
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.09% from 3.10%
- The average contract interest rate for 15-year fixed-rate mortgages increased to 2.39% from 2.38%