Mortgage Levels Sink to Lowest Level Since Pre-Pandemic

Key Highlights

• Mortgage applications down -1.8% last week even as mortgage rates slipped
• Both purchase and refinance applications took hits

Mortgage Demand Down Again

Clearly, low inventory and high home prices are taking a toll on mortgage demand.?Mortgage applications, both purchase and refinance applications, fell for the second straight week last week despite the fact that mortgage interest rates also fell.

Both Mortgage Purchase and Mortgage Refinance Applications Fell

Both purchase and refinance applications dropped, according to the?Mortgage Bankers Association (MBA).?The MBA indicated that purchase applications dropped -1% last week to the lowest level since the beginning of 2020, well before any of us even knew the term COVID-19.?In fact, according to the MBA, purchase applications were -14% lower than they were one year ago.

Mortgage refinance applications dropped -2% last week as well.?Refinance applications have been trending lower than 2020 levels for the last four months and last week, those refi applications were -8% lower than they were last year during this same time frame.

Joel Kan, associate vice president of economic and industry forecasting with the MBA, said, “Swift home-price growth across much of the country, driven by insufficient housing supply, is weighing on the purchase market and is pushing average loan amounts higher.”

Mortgage Rates Slipped Despite Good Economic News

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (548,250 or less) fell 5 basis points to 3.15, with points decreasing to 0.38 from 0.39, including the origination fee on loans with a 20% down payment.

Even this drop in interest rates, rising wages and a strong jobs report in June did not affect purchase.?Likewise, refinance demand was not affected because, according to Kan, “…many borrowers previously refinanced at even lower rates.”