The weekly mortgage applications survey from Mortgage Bankers Association (MBA) continues to report a downward trend.
The volume of mortgage loan applications decreased 0.5% on a seasonally adjusted basis for the week ending August 22, dropping 2% on an unadjusted basis. The previous survey reported a seasonally adjusted decrease of 1.4%.
While the average 30-year fixed mortgage rate dropped to its lowest since October earlier this month, MBA experts note that the slowly rising rate could explain the slight drops in applications.
MBA’s Vice President and Deputy Chief Economist Joel Kan, said, “Mortgage rates inched higher for the second straight week, with the 30-year fixed-rate up to 6.69%. While this was not a significant increase, it was enough to cause a pullback in refinance applications,” said Joel Kan, MBA’s vice president and deputy chief economist.
Overall mortgage loan applications may be slowing down but the seasonally adjusted purchase loan index increased 2.2% from the previous week. The unadjusted purchase index, however, decreased 0.1% from the previous week and is 25% higher than one year ago.
“Purchase applications had their strongest week in over a month, up 2%, and the average loan size increased to its highest level in two months at $433,400,” Kan said. “Prospective buyers appear to be less sensitive to rates at these levels and are more active, bolstered by more inventory and cooling home-price growth in many parts of the country.”
Besides the purchase index, all other forms of loans saw slight drops. The refinanced mortgages, fixed-rate mortgages (FRM) and adjustable-rate mortgages (ARM) decreased by 3.5%, 0.2% and 3.7% respectively. The FHA share of total applications remains unchanged since last week, but the share of Veterans Affairs (VA) loans dropped by about 0.1%. USDA applications also decreased to 0.5%, and was 0.6% from the week prior.
The decrease in mortgage applications may reflect a broader picture for homeownership. A recent study from Harvard University’s Joint Center for Housing Studies (JCHS), reported that homeownership rates will likely plateau over the next decade between 64.3% to 66.8%.
For the full report, click here.
