
Mortgage applications saw a decline for the second consecutive week, impacted by a recent rise in interest rates, according to data released by the Mortgage Bankers Association on Wednesday.
The market composite index, which tracks loan application volume, experienced a 0.2% decrease for the week ending July 5 on a seasonally adjusted basis, following a more significant 2.6% drop the previous week. On an unadjusted basis, the index plummeted 20% sequentially for the same week.
The refinance index fell by 2% from the prior week but managed to achieve a 28% increase on a yearly basis. Joel Kan, the association’s deputy chief economist, attributed this to substantial home equity gains in recent years but noted that current rates provide little incentive for most borrowers to refinance.
Conversely, the seasonally adjusted purchase index inched up by 1% from the previous week, driven by an uptick in Federal Housing Administration and Veterans Affairs applications as reported by Kan. However, without seasonal adjustments, the purchase index plunged 19% on a weekly basis and dipped 13% year-over-year.
The average interest rate for 30-year fixed-rate mortgages with loan balances of $766,550 or less slightly decreased to 7% from 7.03% the week before. For larger loan balances, the rate increased to 7.13% from 7.11%. For 15-year loans, the interest rate rose to 6.63% from 6.56%.
Rates for 30-year fixed-rate mortgages backed by the FHA dropped to 6.87% from 6.9% the prior week. The proportion of FHA loans, commonly used by first-time homebuyers and requiring smaller down payments, decreased to 12.5% of total applications from 13.1% on a weekly basis.
Rising home inventory in June and extended durations on the market are indicating a slight shift towards a buyer’s market, according to a report by Realtor.com on Tuesday.