That’s driven mortgage application volume down to its lowest level since May. This decrease represents a pretty steep drop in both purchases and refinances activity just over the last week. The Mortgage Bankers Association (MBA) reported an overall 3.8% drop in total mortgage applications. Note that this figure is on a seasonally adjusted index, normalized against the previous week. This trend continues against a backdrop of recent volatility in interest rates, beginning to make their way down but still sitting high overall.
The average contract interest rate for 30-year fixed-rate mortgages is at 6.83%. This is true for conforming loan balances of no more than $806,500. This marks a 17-basis-point drop from one week ago’s 6.84%. Average points for these mortgages decreased 2 basis points to 0.60, which accounted for the origination fee.
Applications to refinance a mortgage were down 1% on the week. Although current market activity is subdued, refinance interest among homeowners remains strong. There could be more residents taking shelter as this week’s numbers are still 30% over the same week a year ago. Applications for home purchases dropped overall, declining a dramatic 6% this week. They are still 17% above where they were this time last year.
According to Joel Kan, vice president and deputy chief economist at the MBA, with fewer homeowners being able to afford to move, mortgage applications are faltering.
“Mortgage applications fell to their lowest level since May, with both purchase and refinance activity declining over the week.” – Joel Kan
Kan also explained the bigger economic picture behind why homebuyers, particularly first-time buyers, are feeling squeezed, saying,
“There is still plenty of uncertainty surrounding the economy and job market, which is weighing on prospective homebuyers’ decisions.” – Joel Kan
The next big event expected by Wall St and market watchers is the government’s monthly employment report, due out on Friday. Industry analysts are looking to this report to become an indicator for stabilization in future mortgage rate volatility, as well application activity.
Mortgage rates were a bit better early this week. They still expect a bigger move to be after the Federal Reserve unveils its latest interest rate guidance on Wednesday. Chairman Jerome Powell is likely to shed light on how Fed actions will shape market expectations and borrowing rates in the months ahead.