Despite this decrease, purchase applications have been steadily rising since the pandemic began, which indicates that buyers are taking advantage of current conditions to get into the market.
As the report notes, the Mortgage Bankers Association’s (MBA) weekly survey for the week ending July 17th showed a decline in the total application volume index by 0.6%. Refinancing activity dropped by 1%, while purchase applications rose by 0.2%. This small rise in purchase applications is indicative of a larger trend nationwide, as homebuyers are taking advantage of lower interest rates and increased inventory amidst the economic downturn.
MBA Chief Economist Mike Fratantoni noted that while it is true that refinancing activity has decreased, purchase activity is still accelerating. He pointed out that there has been a 7% increase in new home sales since May and a 10% increase in existing home sales since last year. The growth in purchase applications has also been supported by additional loan products entering the market, such as low-down payment loans and other specialized products.
In addition, the report notes that application sizes have also increased. Loan size for purchase applications rose up 1.3% from last month, which could indicate that buyers are seeking larger mortgages than before. This could be due to an increased appetite for second homes or recreational property, as well as a desire to take advantage of the current market and afford more expensive homes than they would under normal economic conditions.
The article further states that mortgage loan delinquencies continue to fall, indicating a healthy housing market overall. Delinquency rates for conventional loans fell to 2.76% in June, down from 3.01% in May and 10.09% in April. This suggests that borrowers are continuing to make timely payments, over and above what might be expected in a severely weakened economy.
Overall, the report from the National Mortgage News paints an optimistic picture for the future of the housing industry. Despite lower total application volume, purchase activity is on the rise and loan sizes are increasing, suggesting that buyers are looking to take advantage of current conditions. Furthermore, delinquency rates are declining, indicating that borrowers are managing their debt well. This data serves to support the conclusion that, while the economy is in a weakened state, the housing market is stable and primed for growth.
This article was contributed on Jan 03, 2024
