An increase in mortgage rates is responsible for a decrease in mortgage applications last week, according to the Mortgage Bankers Association (MBA).
The Market Composite Index decreased 3.4 percent on a seasonally adjusted basis for the week ending June 14 compared to the week ending June 7. On an unadjusted basis, the index was down by four percent compared with the previous week. The seasonally adjusted Purchase Index dropped four percent and the unadjusted index declined by five percent–although the latter was also four percent higher than the same week one year ago. The Refinance Index fell by four percent from the previous week, but the refinance share of mortgage activity increased to 50.2 percent of total applications from 49.8 percent the previous week.
Among the federal programs, the FHA share of total applications increased to 9.4 percent from 8.9 percent the week prior and the VA share of total applications increased to 11.9 percent from 11 percent, but the USDA share of total applications dipped to 0.5 percent from 0.6 percent.
“After a six-week streak, mortgage rates for 30-year loans increased slightly, which led to a pullback in overall refinance activity,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Borrowers were sensitive to rising rates, but the refinance share of applications was still at its highest level since January 2018, and refinance activity was at its second highest level this year. Government refinances actually increased last week, led by a 17 percent in VA refinance applications, while conventional refinance applications decreased seven percent.”