According to the Mortgage Banker’s Association, total mortgage application volume decreased by -4.3% the week of April 28 compared to the week before.

Within that total mortgage application volume, home purchase applications were down -4%, barely 1% higher than one year ago. Refinance applications decreased -5%. Despite being down -5%, refinance applications were +11% higher than last year and that refinance kick made the volume of annual mortgage applications higher by +4.5%. This annual +4.5% increase was due, according to industry experts, to interest rates being -38 basis points lower than last year.

Joel Kan, the associate vice president of economic and industry forecasting with the Mortgage Banking Association, told CNBC, “Mortgage rates were lower last week (4/28/19), as concerns over global growth, particularly in Germany, outweighed more positive domestic news on Q1 2019 GDP growth and business investment.”

Home sales, wrote Diane Olick for an article on CNBC, “are sending mixed signals right now.” Weaker sales began the year but pending home sales (based upon signed contracts) jumped +3.8% in March 2019. Likely, this surge in sales, particularly in the low end of the market where supply is almost non-existent and competition is through the roof, was due to a sharp drop in interest rates.

According to CNBC, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) was down 4.42% from 4.46% with points increasing to 0.46 from 0.44 for loans with a 20% down payment, including origination fees.”

The fact is, however, that overall weak sales are on the highest end of the market. Rather than mortgage interest rates being the central issue for this market tier, changes made to the tax code in the 2017 Tax Law and higher prices, though slowing, are at issue. Too high prices and today’s state and local tax (SALT) deductions and property tax deductions are steering many buyers, even mid-market buyers, away from buying and towards staying where they are.



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