Mortgage loan application volume declined again last week despite rates falling for all loan products, according to the Mortgage Bankers Association’s weekly survey.
The adjusted Market Composite Index, a measure of mortgage loan application volume, decreased by 1.9%.
The adjusted purchase index fell 3%, though the unadjusted purchase index increased by 31% and was 40% lower YOY.
The 30-year fixed rate dropped to 6.41%, having now fallen 73 bps from just a month ago. It remains 3 percentage points higher than December of 2021.
“Purchase activity slowed last week, with a drop in conventional purchase applications partially offset by an increase in FHA and USDA loan applications. The average loan size for purchase applications decreased to $387,300 – its lowest level since January 2021,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
“The decrease was consistent with slightly stronger government applications and a rapidly cooling home-price environment.”
Home price appreciation is now half of what it was in April, its lowest recorded point since early 2021.
Low inventory, waning buyer purchase power, and economic uncertainty are at the heart of the issue, according to CoreLogic leaders.
Price growth is expected to cool through next spring when the housing market may go negative before slowly rebounding in the latter half of 2023. CoreLogic predicts appreciation will be 4.1% next October.
Refinances rebounded slightly, up 5%, after falling last week to their lowest share of applications since 2000.
They remain 80% lower than the same time last year, however, comprising 28.7% of total applications.
The ARM share of activity dipped to 7.6% of applications.
The FHA share of total applications rose to 13.7% from 12.2%, with an average interest rate of 6.39%.
The VA share rose to 11.4% from 11.2%, and the USDA share increased to 0.6%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell from 6.49% to 6.41%.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances decreased to 6.08% from 6.35%, and for 5/1 ARMs rose from 5.48% to 5.59%.
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