The data revealed that mortgage application volumes had decreased by 8.3 percent since the week prior. The refinance index decreased by 9 percent and the purchase index decreased by 5 percent. This is likely due to the increasing uncertainty of the pandemic’s effects on the economy, which is causing many potential homebuyers and refinancers alike to focus their attention more on saving and protecting their current assets than looking to make large purchases and investments.
The MBA reported an increase in the average contract interest rate for 30-year fixed-rate mortgages, which grew to 3.17 percent this week from 3.13 percent. Average mortgage rates for 15-year fixed-rate mortgages also increased, going up from 2.62 percent to 2.69 percent. As a result of the changes, the overall share of refinance applications decreased nearly two percentage points from last week, indicating that concerns about the economic state are having a larger impact on those looking to take out a loan than those looking to merely refinance.
In addition, the report showed that applications from Black American, Asian American, and Hispanic American borrowers all increased compared to the week prior. This could potentially indicate that lenders are beginning to embrace diversity and are becoming more open to working with borrowers of different backgrounds. This could lead to more homeownership opportunities within minority populations, helping to reduce disparities within the housing market.
Overall, the data released by the MBA paints a picture of a wary public, concerned about their financial security in the midst of the ongoing pandemic. Borrowers are opting to focus more on preserving existing assets rather than taking out expensive loans, causing a decrease in refinance applications and mortgage applications overall. At the same time, lenders appear to be beginning to embrace greater diversity in their applicants, especially among minority populations.
Analysis:
The MBA’s recent Mortgage Market Index has given us a better indication of the state of the housing market amid the COVID-19 pandemic. The data revealed that mortgage application volumes have declined by 8.3 percent since the prior week, with both the refinance index and the purchase index seeing decreased numbers. This could be attributed to the increasing uncertainly around the pandemic’s effects on the economy, causing potential borrowers to focus more on protecting their finances than making major investments.
Moreover, the average contract interest rate for 30-year fixed-rate mortgages saw an increase from 3.13 percent to 3.17 percent, while 15-year fixed-rate mortgages saw an increase from 2.62 percent to 2.69 percent. This resulted in a nearly two percentage point decrease in the overall share of refinance applications.
On a more positive note, the report also showed that applications from Black American, Asian American, and Hispanic American borrowers all increased compared to the week prior. This could be seen as a sign of increased acceptance of minority populations as lenders become more open to servicing their credit needs.
All of this combines to paint a picture of an uncertain public, concerning themselves more with protecting what they currently have than taking out costly loans. At the same time, lenders appear to be beginning to recognize the importance of diversity in the housing market, which is a welcome change within the industry.
This article was contributed on Aug 02, 2023
