Mortgage Applications Decrease As Housing Supply Tapers Off
The Mortgage Bankers Association's Weekly Mortgage Applications Survey reported a 1.8% decrease in mortgage applications on an adjusted basis and a 2% decrease on an unadjusted basis, for the week ending June 26, 2020. According to the report, the combination of a decrease in pent-up demand and low housing inventory has contributed to the slip in mortgage applications. The survey also showed a 2% decrease in the Refinance Index and a 1% decrease in the seasonally adjusted Purchase Index.
"Mortgage applications fell last week, despite mortgage rates hitting another record low in MBA's survey. Investors are contemplating the risks of the recent resurgence of COVID-19 cases to the labor market and economy, and Treasury rates and mortgage rates are moving lower as a result," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "After two months of strong growth, purchase applications declined for the second week in a row. The weakening in activity is potentially a signal that pent-up demand is starting to wane and that low housing supply is limiting prospective buyers' options. The average purchase application loan size increased to a record high in our survey—more proof that tight inventory conditions are leading to faster price growth. Refinance applications also decreased but remained 74% higher than a year ago. The 30-year fixed-rate has been below the 3.5% mark since late March. It is possible that many borrowers have already refinanced or are waiting for rates to go even lower."
According to the report, the refinance share of mortgage activity has decreased minimally from 61.3% to 61.2%. The adjustable-rate mortgage (ARM) share of activity increased to 3.2% of total applications. The FHA share of total applications increased from 11.4% to 11.7% and the VA share of activity fell to 10.8% from 11%.
Click here to read more about the MBA's latest Weekly Mortgage Applications Survey.