Mortgage

Mortgage applications declined by 2.2% during the week ending July 3, primarily due to a 4% drop in refinancing activity, as interest rates for 30-year fixed-rate mortgages remained above the 6% threshold. The Mortgage Bankers Association (MBA) reported that the Market Composite Index, which measures total mortgage loan application volume, saw this decrease on a seasonally adjusted basis. Chief economist Mike Fratantoni noted that the 30-year fixed rate slightly increased to 6.58% for the week. While government purchase volume saw a modest increase, particularly a 5% gain in VA purchase applications, conventional purchase activity experienced a decline, leading to a 1% decrease in the Purchase Index, a key indicator for home sales. Refinancing applications showed little incentive for homeowners to act with rates still elevated. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose marginally from 6.57% to 6.58%, according to MBA calculations. In contrast, Freddie Mac reported average 30-year rates at 6.43% for the week ending July 2, a slight decrease from 6.49% the previous week. This period has seen rates consistently above 6% since February, influenced by economic uncertainty stemming from the conflict in the Middle East and its impact on oil prices and inflation fears. Despite the cooling effect of economic uncertainty on borrowing, the spring housing market has demonstrated resilience. The share of Federal Housing Administration applications decreased to 16.4% from 16.9% in the prior week. Conversely, the Veterans Affairs share of total loan applications saw a slight uptick, moving from 12.9% to 13% during the same period. This mixed performance in purchase applications, alongside the significant dip in refinancing, highlights the current sensitivity of the mortgage market to interest rate levels and broader economic conditions.

Mortgage applications saw a 2.2% decrease from the previous week, according to data from the Mortgage Bankers Association (MBA) for the week ending July 3. This figure incorporates an adjustment for the Fourth of July holiday. On an unadjusted basis, the index experienced a 12% decline compared to the prior week. The adjusted refinance index dropped by 4% week-over-week, though it remains 8% higher than the same week in the previous year. The seasonally adjusted purchase index also decreased by 1% from the previous week. Mike Fratantoni, MBA's senior vice president and chief economist, stated that mortgage application volume was largely unchanged during the week of the nation's 250th Independence Day celebration, with the 30-year fixed rate seeing a minor increase to 6.58%. Following holiday adjustments, government purchase volume saw a modest increase, driven by a 5% rise in VA purchase applications, while conventional purchase activity declined. Refinance application volume decreased by 4%, as elevated interest rates offered little incentive for homeowners to refinance. The refinance share of total mortgage activity fell to 40.6% from 41.4% the week prior. Conversely, the adjustable-rate mortgage (ARM) share of activity rose to 7.8% of total applications. Examining specific loan products, the Federal Housing Administration (FHA) share of total applications decreased to 16.4% from 16.9% a week earlier. The U.S. Department of Veterans Affairs (VA) share increased to 13%, up from 12.9%, and the U.S. Department of Agriculture (USDA) share also saw an increase to 0.5%, up from 0.4%. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, capped at $832,750 or less, edged up to 6.58% from 6.57%. In contrast, the average rate for 30-year fixed mortgages with jumbo loan balances decreased to 6.50%.