Mortgage application volume fell again in the past week, dropping to its lowest point since Mid-July, the Mortgage Bankers Association’s (MBA) weekly survey found.
Mortgage application volume fell by 1.9%. On an unadjusted basis, the index dropped 3% from last week. The data is driven largely by a 3% decline in refinancing. The refinance index was 4% lower year-over-year for the same week.
The survey also showed a small 0.2% decline in the seasonally adjusted purchase index.
“Mortgage application volume fell last week to its lowest level since mid-July, as mortgage rates have stayed just above 3% for several weeks. Refinance volume has been moderating, while purchase volume continues to be lower than expected given the lack of homes on the market,” MBA Senior VP and Chief Economist Mike Fratantoni said.
“Economic data has sent mixed signals, with slower job growth but a further drop in the unemployment rate in August. We expect that further improvements will lead to a tapering of Fed MBS purchases by the end of the year, which should put some upward pressure on mortgage rates.”
Freddie Mac has predicted mortgage rates will jump up to 3.4% by the end of the year. But the trend may depend on Federal Reserve Chairman Jerome Powell’s timeline for withdrawing some of the central bank’s pandemic policies. The Fed has yet to determine exactly when it will begin changing its interest rates.
“The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test,” he said in a speech at the Jackson Hole symposium.
Here are some highlights from the survey:
- Refci share of mortgage activity stayed flat at 66.8%
- Adjustable-rate mortgage (ARM) share fell by 2.5%
- FHA’s share: 10.9% (down from 11.2%)
- VA’s share: 10.4% (up from 9.7%)
- USDA share: 0.5% (unchanged)
- Average contract interest, 30-year fixed-rate with conforming loan balances: 3.03% (unchanged)
- Average contract interest, 30-year fixed-rate with jumbo loans: 3.14% (up from 3.13%)
- 30-year fixed-rate mortgages backed by the FHA: 3.09% (down from 3.07%)