Mortgage Applications See Pronounced Weekly, Monthly and Yearly Drops

The number of Americans filing mortgage applications dropped by several critical short-term metrics this week as signs abounded of an ongoing homebuying slowdown across the country.

The Mortgage Bankers Association this week recorded a nearly four percent drop in mortgage applications week over week, posting a 3.9 percent decline in applications relative to the prior seven days.

The weekly drop comes after the MBA revealed a yearly drop of more than 25 percent as well as a month-over-month drop of about four percent.

MBA Associate Vice President of Economic and Industry Forecasting Joel Kan pointed out in the weekly report that “mortgage rates were at their highest levels in around a month, with the 30-year fixed rate increasing above 3 percent to 3.06 percent.

“The increase in mortgage rates caused a 5 percent decrease in refinancing, driven by a 7 percent drop in conventional refinance applications,” Kan added. “Even though rates are 7 basis points lower than the same week a year ago, the refinance index is around 8 percent lower. The eligible pool of homeowners who stand to benefit from a refinance is smaller now.” 

He further noted that “despite a second-straight weekly decrease, average loan sizes remain close to record highs. This is a continuing sign that sales prices are still elevated, driven by stiff competition leading to accelerating home-price growth.”