WASHINGTON–Potential homebuyers have again pulled back, largely due to worries over the direction of interest rates and perhaps the larger economy.
Mortgage application volume declined 3.2% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. Volume was 22% lower compared with the same week one year ago.
"Recent volatility in the financial markets and increasing rates continue to adversely impact mortgage application activity, even as the general economic outlook remains positive," said Joel Kan, an economist with the MBA, in a statement. "Both home purchase and mortgage refinance applications decreased over the week, driven largely by declines in conventional applications."
According to the MBA, mortgage applications to purchase a home fell 2.3% for the week to the lowest level since February 2017. Purchase volume was 3% lower compared with a year ago.
“While tight supply of homes for sale had been plaguing buyers for much of this year, listings are increasing, but so are prices and interest rates, weakening affordability,” noted CNBC in its analysis.
Rate Averages
The MBA data show average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to 5.17% from 5.15%, with points increasing to 0.55 from 0.51 (including the origination fee) for loans with 20% down payments. That is the highest level since 2010.
Applications to refinance a home loan, which are highly rate sensitive, noted the MBA, fell 4.3% for the week and were 40% lower compared with a year ago – the lowest level in nearly 18 years.
“While homeowners now have more collective home equity than they ever have in history, thanks to higher home values, fewer are willing to tap that equity through a refinance, because it would require giving up their rock-bottom interest rates,” observed CNBC. “Since rates sat so low for so long, there is a shrinking pool of borrowers who could now benefit from a refinance, cash-out or not.”