Economists touted regional improvements to housing inventory for the increase in home-purchase application activity this week but cautioned the uptick will likely be short-lived with oil prices rising as a result of the ongoing conflict in the Middle East.
The latest Market Composite Index from the Mortgage Bankers Association (MBA)—its measure of mortgage loan activity volume and includes purchases and refinances—shows mortgage application activity increasing this week 1.9% on a seasonally adjusted basis following a decrease of 2.7% last week. On an unadjusted basis, the Index increased 2% compared with the previous week.
The slight uptick comes as the average 30-year mortgage rate reached its highest point since last August at 6.69% this past week, and was up to 6.77% as of this writing.
“Mortgage rates reached another high point last week, with the 30-year conforming rate now at 6.69 percent, its highest level since last August,” said Mike Fratantoni, MBA’s SVP and chief economist. “However, purchase volume increased modestly for the week. Growing home inventory in many markets is supporting more purchase activity. Incoming data showed that inflation dropped in June, but with oil prices spiking again, that improvement seems unlikely to continue in July data, and mortgage rates are likely to remain higher as a result.”
MBA’s Refinance Index decreased 2% from the previous week and was 7% higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 7% from one week earlier. The unadjusted Purchase Index increased 6% compared with the previous week and was 0.2% higher than the same week one year ago, according to the report.
The refinance share of mortgage activity increased to 41.2% of total applications from 43.2% the previous week, MBA reported. The adjustable-rate mortgage (ARM) share of activity increased to 7.7% of total applications.
Government-backed loans mostly decreased this week: The FHA share of total applications decreased to 17.0% from 17.7% the week prior. The VA share of total applications decreased to 13.2% from 13.6% the week prior, and the USDA share of total applications remained unchanged at 0.5% the week prior.
To view the full report, click here.
