Drop in mortgage applications at the end of July


After weekly jump mortgage applications driven by increased refinancing activity declined again, although interest rates were still favorable for borrowers.

The Mortgage Bankers Association’s Composite Market Index, which tracks applications based on a weekly survey of MBA members, was down seasonally adjusted 1.7% for the period ending July 30. Without adjustments, the decline was 2%. Compared to volumes in the same week of 2020, the index was down 8.1% seasonally.

Despite the fact that low interest rates often led to a sharp increase in refinancing activity in 2021, the refinancing index was down 2% on a weekly basis and was 3% lower than in the same week a year ago.

After falling to its lowest level since May 2020 in the previous week, the buying index fell another 2% on a seasonally adjusted basis. Without adjustments, purchases were down 2% from a week earlier and 18% down from the same period last year.

“Purchase order volumes have declined again, reflecting continued stock shortages that continue to drive home prices skyrocketing across the country,” said Mike Fratantoni, senior vice president and chief economist at the MBA, in a press statement.

Research published this week highlighted the impact of housing shortages on the market and buying mood… CoreLogic data for June showed house prices accelerating to highest level since 1979, with some signs of cooling in the near future.

Refinancing accounted for 67.6% of the total for the week, up from 67.5%. The share of applications for mortgages with an adjustable interest rate was 3.4%, down from 3.6% a week earlier.

Average mortgage loan amounts also decreased from week to week for different types of applications. The average loan amount was $ 345,300, down 3.5% from $ 357,700 in the previous reporting period. In terms of refinancing, loans averaged $ 321,900, 3.9% below the average of $ 335,000 reported a week earlier. The average purchase loan size was $ 394,100, up from $ 404,200 in the previous week, a 2.5% decrease.

Applications for government-funded loans gained the same volume as a week earlier. Federal Housing Administration-secured mortgages accounted for 9% of activity, unchanged from a week earlier, while the share of applications from the Veterans Affairs Office rose from 9.7% to 9.9%. The share of loans secured by the USDA stood at 0.5%, which also remained unchanged from the previous week.

30-year compliance rate falls again
More than a year after the start of the coronavirus pandemic, fears over the spread of COVID-19 around the world continue to affect the mortgage industry, keeping mortgage rates from rising significantly, Fratantoni said.

“Interest rates around the world fell last week as markets gauged the latest concerns about the delta option. 30-year mortgage rates fell below 3% in our study for the first time since February this year, providing an opportunity for many homeowners who have not refinanced yet to lower their rate and their payments, ”he said.

  • The average interest rate on 30-year fixed rate mortgages with a corresponding loan balance of $ 548,250 or less fell to 2.97%. A week earlier, the rate was 3.01%.
  • The contractual interest rate on 30-year large fixed-rate loans with balances above $ 548,250 averaged 3.12%, up one basis point from 3.11% in the previous week.
  • The average interest rate on 30-year fixed rate mortgages backed by the FHA also rose to 3.08% from 3.03% in the previous week.
  • After falling to its lowest level since the MBA began research in 1990, the average interest rate on 15-year fixed-rate mortgages fell further, dropping another three basis points to 2.33% from 2.36. % during the week.
  • The average value of 5/1 adjustable rate mortgages rose to 2.93% from 2.81% a week earlier.

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