A sharp drop in mortgage interest rates last week wasn’t enough to get overall mortgage applications moving. Total mortgage application volume—for refinancing and home purchases—eased 0.5 percent last week on a seasonally adjusted annual basis compared to the previous week, the Mortgage Bankers Association reported. Loan volume is now 13.5 percent lower than a year ago.
Broken out, refinance applications were down 2 percent for the week and are now 28 percent lower than a year ago and at one of their lowest readings in the past 20 years. Homeowners are generally influenced to refinance based on interest rates, and interest rates were significantly lower a year ago. More than half of all homeowners with a mortgage have an interest rate below 4 percent, according to CoreLogic data.
Purchase applications for home shoppers eked out a 1 percent week-over-week increase last week, but are 1.4 percent lower than a year ago. The only increases were in Federal Housing Administration purchase applications, which offer lower down payment options to purchasers with lower credit scores.
“A shortage of inventory remains a significant constraint, but it is interesting to note that applications for government purchase loans fared better on the week, indicating that first-time buyers remain in the market,” says Mike Fratantoni, the MBA’s chief economist.
Meanwhile, the 30-year fixed-rate mortgage averaged 4.79 percent last week, down from 4.84 percent the previous week, the MBA reports.
Source:
“Mortgage Applications Fall, as Refinancing Hits 20-Year Low,” CNBC (July 4, 2018)
