Mortgage applications dropped as rates moved higher last week: MBA

Mortgage applications declined by 2.6% on a seasonally adjusted basis during the week ending June 28, according to data released Wednesday by the Mortgage Bankers Association (MBA).

The trade group cited upward movement in mortgage rates as the key reason why. According to HousingWire’s Mortgage Rates Center, the average rate for 30-year conventional loans was at 7.12% on Wednesday, up from 7.06% a week earlier, while the 15-year conventional rate rose from 6.70% to 6.96% during the same period.

Purchase application volume accounted for the bulk of the decline in the overall index as the seasonally adjusted figure dropped 3% on a weekly basis and 12% on a yearly basis. Refinance applications were down 2% from the prior week but up 29% year over year and now account for 35.7% of all activity.

“Mortgage rates moved higher last week, crossing the 7 percent mark, even as the latest inflation data has kept market expectations alive for a rate cut from the Fed later this year,” Mike Fratantoni, MBA’s senior vice president and chief economist, said in a statement.

“Purchase applications decreased the final full week of June, even as both new and existing inventories have increased over the past few months. Refinance activity also remains subdued — although there was a slight increase in applications for conventional refinance loans.”

The MBA’s survey — which covers 75% of all retail residential mortgage applications in the U.S. — found that the average contract interest rate for 30-year fixed-rate conforming loans (balances of $766,550 or less) increased by 10 basis points to 7.03% during the week ending June 28. The average rate for jumbo loans (balances above $766,550) rose 7 basis points to 7.11%. And adjustable-rate mortgages (ARMs) declined to 6% of all application activity.

Federal Housing Administration (FHA) loans accounted for 13.1% of activity, unchanged during the week. U.S. Department of Veterans Affairs (VA) loans saw their share decline from 13.8% to 12.9%, while U.S. Department of Agriculture (USDA) loans receded to a share of 0.3%.