WASHINGTON–Total mortgage application volume declined 12.7% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The drop was mostly driven by a pullback in refinancing, MBA data indicate.
Applications to refinance a home loan fell 21% for the week and were 16% higher than the same week one year ago. The decline came even though mortgage rates were 32 basis points higher last week than the year before. The refinance share of mortgage activity decreased to 55% of total applications from 60% the previous week, MBA said.
Average Rate at 6.46%
The data show the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, increased to 6.46% from 6.34%, with points rising to 0.61 from 0.57, including the origination fee, for loans with a 20% down payment.
In a statement, MBA VP-Chief Economist Joel Kan said mortgage rates increased to their highest level in three weeks “as Treasury yields pushed higher on recent, stronger-than-expected economic data. After the burst in refinancing activity over the past month, this reversal in mortgage rates led to a sizeable drop in refinance applications, consistent with our view that refinance opportunities this year will be short-lived.”
Pullback in Refis
MBA further reported that refinance activity pulled back for all loan types, including a 22% drop in conventional refinances and a 27% decline in VA refinances. The average loan size for refinances fell to $380,100 from $461,300 two weeks ago, “as these higher rates eliminated the refinance incentive for many borrowers with large loans,” Kan added.
Applications for a mortgage to purchase a home declined 1% for the week and were 16% higher than the same week one year ago. This is after three consecutive weeks of gains.
“The strength of the purchase market has also been impacted by other factors such as broader economic conditions, the health of the job market, and housing inventory,” Kan said.
