Those shopping for a home or a refinance for a lower rate appear to be moving back to the sidelines this past week, as application activity for both has declined for a second consecutive week following mortgage rates rising to their highest point in more than a year.
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 decreasing this week 2.9% on a seasonally adjusted basis following a decrease of 6.4% last week. On an unadjusted basis, the Index decreased 3% compared with the previous week.
The dip comes as the average 30-year mortgage rate reached its highest point in over a year at 6.81% this past week, but has ticked down 6 basis points to 6.75% as of this writing.
“In the wake of the July FOMC meeting, longer-term rates increased, with mortgage rates reaching their highest level in more than a year, with the 30-year fixed mortgage rate rising to 6.81 percent,” said Mike Fratantoni, MBA’s SVP and chief economist. “Application volume for both refinance and purchase loans declined for the week, and are now running behind last year’s pace, indicating that higher mortgage rates have weakened overall demand.”
MBA’s Refinance Index decreased 2% from the previous week and was 9% lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 4% from one week earlier. The unadjusted Purchase Index decreased 4% compared with the previous week and was 3% lower than the same week one year ago, according to the report.
The refinance share of mortgage activity increased to 39.9% of total applications from 39.5% the previous week, MBA reported. The adjustable-rate mortgage (ARM) share of activity decreased to 7.9% of total applications.
For government-backed loans, this week’s report showed the FHA share of total applications increased to 17.3% from 17.0% the week prior. The VA share of total applications decreased to 12.3% from 12.6% the week prior, and the USDA share of total applications increased to 0.5% from 0.4% the week prior.
To view the full report, click here.
