It was a mixed week for rates, which started high and then fell slightly, but the damage was done early.
Total mortgage application volume decreased 3.7% for the week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.27% from 3.36%, with points decreasing to 0.33 from 0.43 (including the origination fee) for loans with a 20% down payment.
“Purchase and refinance applications declined, with most of the pullback coming earlier in the week when rates were higher, said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Refinance activity has now decreased for nine of the past 10 weeks, as rates have gone from 2.92% to 3.27% over the same period.”
For the week, applications to refinance a home loan fell 5%. Demand was 31% lower than a year ago and the lowest level in over a year. Most borrowers have already refinanced to lower rates or are unable to qualify for a refinance at today’s rate. The refinance share of mortgage activity decreased to 59.2% of total applications from 60.3% the previous week.
Mortgage applications to purchase a home fell 1% for the week but were 51% higher than a year ago, although annual comparisons will be an outlier for the next month as the housing market ground to a halt at the start of the pandemic and then rebounded dramatically. Purchase demand is lower than the same week of 2019.
“The third straight week of declining purchase activity is a sign that rising home prices and tight supply are constraining home sales — especially in the lower price tiers,” added Kan.