The survey found that the Market Composite Index, which measures total mortgage application volume, fell by 3.2% from the previous week. Additionally, the Refinance Index declined by 9%, while the seasonally adjusted Purchase Index increased slightly by 0.3%.
The decrease in overall mortgage application volume was largely due to a 9% decrease in refinancing applications. This was likely caused by a slight increase in mortgage rates in mid-July, as the average rate for a 30-year fixed rate loan rose from 4.02% to 4.07% over the course of the week. Additionally, despite the slight increase in purchase applications, they remain at a historically low level for this time of year.
With the decrease in refinancing activity, lenders saw the share of adjustable-rate mortgage applications drop to the lowest level since October 2008, and the share of government applications also decreased. However, the share of jumbo loans (loans with a balance higher than $510,400) increased over the week, as there was a 7% increase in applications for these types of loans.
Overall, the survey indicates that mortgage application activity took a hit in late July due to an increase in mortgage rates. Despite a slight uptick in purchase applications, they remain at a historically low level for this time of year. The survey found that the share of adjustable rate mortgage applications dropped to its lowest level since October 2008, while the share of jumbo loans has gone up. As economic conditions continue to evolve, lenders will be looking to see if the trend of decreasing mortgage applications will continue for the remainder of the year.
Analysis:
The most recent Mortgage Bankers Association's Weekly Mortgage Applications Survey shows a decrease in overall mortgage application volumes in late July, with a 3.2% decrease in the Market Composite Index measured. This largely was due to a 9% decrease in refinance applications caused by a slight uptick in mortgage rates, from 4.02% to 4.07%. Additionally, the survey showed that purchase applications increased slightly by 0.3%, but remain at historically low levels for this time of year.
The survey also revealed that the share of adjustable rate mortgage applications dropped to its lowest level since October 2008, while the share of government applications also decreased. Furthermore, the share of jumbo loans (loans with a balance higher than $510,400) increased by 7%.
While it is difficult to pinpoint exactly what is causing the decrease in overall mortgage application activities, the most likely culprit appears to be an increase in mortgage rates. This is consistent with the fact that refinance applications dropped significantly more than purchase applications over the same period. The survey results suggest that these trends are likely to continue for the rest of the year, though it is important to note that the economic conditions can change quickly and could have an impact on the overall mortgage activity.
Ultimately, the survey results indicate that people are still interested in obtaining mortgages, but the slight increase in mortgage rates is making them hesitant to do so. In order for lenders to maintain as many customers as possible, they may need to reconsider their policies and consider offering more competitive interest rates. By doing so, they may be able to encourage consumers to continue applying for mortgages, thus helping to stabilize the current trend of decreasing mortgage application activity.
This article was contributed on Dec 28, 2023
