Key Highlights

  • Purchase applications demand down nearly -7% compared to four weeks ago
  • Average contract interest rate for 30-year fixed increased to 3.02% from 3%
  • Mortgage rate on 30-year fixed was full percentage point higher one year ago

Weekly mortgage purchase applications dropped -2% from the week prior, a fourth consecutive week of decline in homebuyer demand. Due to this drop in buyer demand, the total volume of mortgage applications fell -0.6% compared to one week ago, according to the Mortgage Bankers Association (MBA).

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Overall, purchase applications were down nearly -7% compared with four weeks ago however, the volume of purchase applications is still +26% higher than one year ago.

Some speculate that this drop in purchase applications may be seasonal while others speculate that historically low inventory, particularly at the entry level, most affordable tier of the market, is causing this drop in buyer demand.

Interest rates moved slightly higher last week to 3.02% from 3% for a 30-year fixed-rate mortgage with a conforming loan balance of $510,400. (Last year, interest rates were a full percentage point higher.) Points, along with interest rates, increased to 0.36 from 0.32, including the origination fee, for loans with a 20% down payment.

This slight rise in interest rates didn’t touch demand for refinances. Refinance volume slightly increased +0.2% from the week before and was +74% higher than one year ago. The refinance share of mortgage activity increased to 66.1% from 65.6% the week before.

Joel Kan, MBA’s associate vice president of economic and industry forecasting, said, “Despite the uptick in rates, refinance activity held steady, with FHA refinance applications posting a +17.6% increase, helping to offset declines in other loan types.”

Thanks to Mortgage Bankers Association and CNBC.

Also read: Weekly Purchase Applications Recover as Rates Hit Record Low, Bankrate Helps Us Understand the Foreclosure Process, What the Federal Reserve Has Done So Far to Save Economy