Mortgage applications saw their second week in a row of increases, this past one fueled by declining Treasury yields and the subsequent mortgage rate declines that typically follow. Experts are mixed on these results as a plus for some borrowers but also as a reason to stay on the sidelines for others who may be concerned about the larger economy.
According to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association (MBA) for the week ending Aug. 1, the Market Composite Index (a measure of mortgage loan application volume) increased 3.1% from the previous week’s 3.8% decrease. On an unadjusted basis, the Index increased 3% compared with the previous week.
“Mortgage rates moved lower last week, following declining Treasury yields as economic data releases signaled a weakening U.S. economy,” said Joel Kan, MBA’s vice president and deputy chief economist. “As a result, the 30-year fixed rate decreased for the third straight week to 6.77 percent. Borrowers sought to take advantage of these lower rates, as both purchase and refinance applications increased over the week.”
But Kan also cautioned that while, “Purchase activity continued to lead 2024’s pace, as increasing for-sale inventory of homes has been supporting homebuying, but on the other hand recent weakness in the economic environment has deterred some prospective homebuyers.”
MBA also reported that the Refinance Index increased 5% from the previous week and was 18% higher than the same week one year ago. The seasonally adjusted Purchase Index increased 2% from one week earlier. The unadjusted Purchase Index increased 1% compared with the previous week and was 18% higher than the same week one year ago.
The refinance share of mortgage activity increased to 41.5% of total applications from 40.7% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.5% of total applications.
Explaining this week’s refinance data, Kan noted, “Refinance applications increased to their strongest pace in four weeks after being on a downward trend the prior three weeks. The refinance share increased to almost 42 percent, its highest level since April.”
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