After three weeks of increasing refinance application activity, refinances accounted for just 62% of mortgage applications, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
The average contract interest rate for 30-year fixed rate mortgages with conforming loan balances ($548,250 or less) increased to 3.94%, up 8 basis points from the previous week. The jumbo loan category (loans above $548,250) saw an even greater jump, climbing 10 basis points to 4.01%. This marks the highest rate for either category since April 2021.
The Total Mortgage Application Volume Index declined by 5.4% in the most recent weekly survey, the seventh weekly decline since reaching the all-time high in February 2021. The Purchase Index also declined, decreasing 6.5% to its lowest level since April 2021. This suggests that the rise in mortgage rates is beginning to curtail housing demand, as prospective buyers pull back due to higher borrowing costs.
“With purchase activity retreating further, the housing market appears to have hit a lull,” said Joel Kan, an MBA associate vice president. “Rates were higher across all loan types last week, and the uptick in interest rates could be one of the contributing factors to the softening demand.”
Back-to-back weeks of rising mortgage rates have caused a sharp slowdown in housing demand, leading to decreased purchase application volumes. In response to this development, the Mortgage Bankers Association has noted that the housing market appears to have hit a lull. The average contract interest rate for 30-year fixed rate mortgages and jumbo loans both notched up to the highest levels since April 2021. As prospective buyers pull back due to higher borrowing costs, the Total Mortgage Application Volume Index and Purchase Index have both declined to their lowest levels since the spring. This demonstrates the impact of increasing mortgage rates on housing demand, and serves to highlight the importance of rate fluctuations in the market.
This article was contributed on Jul 20, 2023