WASHINGTON–Mortgage demand overall weakened again last week, even as interest rates fell slightly, with borrowers showing stronger interest in adjustable-rate mortgages (ARMs).
Total mortgage application volume dropped 4.7% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $806,500 or less decreased to 6.43% from 6.46%, with points falling to 0.60 from 0.61, including the origination fee, for loans with a 20% down payment. The rate was just seven basis points lower than the same week one year ago, the MBA said.
Declining Interest in Refis
MBA data show applications to refinance a home loan, which rose sharply in mid-September and then dropped back again two weeks ago, fell further last week, down 8%. Refinance demand is still 18% higher than it was the same week one year ago.
“With mortgage rates on fixed-rate loans little changed last week, refinance application activity generally declined, with the exception of a modest increase for FHA refinance applications,” Mike Fratantoni, senior vice president and chief economist at the MBA, said in a statement.
Applications for a mortgage to purchase a home fell 1% for the week and were 14% higher year over year. Purchase demand hasn’t moved much in the past few months as potential homebuyers contend with high prices and growing uncertainty in the economy.
More Delistings
“While the supply of homes for sale is higher than it was a year ago, more sellers are delisting their properties or choosing to wait before listing,” noted CNBC in its analysis.
“The ARM share increased to 9.5% last week from 8.4% the prior week. Our survey shows 5/1 ARM rates are averaging almost a percentage point below 30-year fixed rates, and this differential is leading more purchase and refinance applicants to consider ARMs,” added Fratantoni.
