Mortgage applications fell by 10.1% last week after reaching their highest volume in nearly two years the week prior.
The Mortgage Bankers Association (MBA) just released its Weekly Applications Survey for the week ending Aug. 16, indicating that refinance transactions decreased 15%, and the unadjusted Purchase Index by 7% from the previous week.
“Both mortgage rates and mortgage applications have now stabilized after a few weeks of financial market volatility, which led to a quick drop in mortgage rates,” MBA Vice President and Deputy Chief Economist Joel Kan said. “Applications were lower last week, led by a 15% decrease in refinance activity despite the 30-year fixed mortgage rate declining for the third consecutive week to 6.5%, the lowest since May 2023.”
Despite this decline, refinance applications are still 23% higher than a month ago and 90% higher than the same week last year.
“The past two weeks have seen the strongest weekly readings since 2022, as borrowers have sought lower rates,” Kan pointed out. “FHA refinance applications bucked the trend and increased for the sixth straight week.” The MBA’s Purchase Index came in 8% lower than the same week one year ago – its lowest level since February 2024.
Among total mortgage applications, the refinance share of activity fell to 46.3% from 48.6% the week prior; the adjustable-rate mortgage (ARM) share fell to 5.5%; the FHA share increased to 15.6% from 13.5%; the VA share decreased to 15.3% from 16.8%; and, the USDA share increased to 0.4% from 0.3%.
“Home sales have slowed despite rising inventory levels,” Kan said. “Even with lower mortgage rates, potential buyers might be more selective now that there are more options.”
The decline in purchase applications comes as Fannie Mae's Economic & Strategic Research (ESR) Group announced a downward revision to the agency's home sales and originations forecast for the remainder of 2024.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.50% from 6.54%, with points increasing to 0.60 from 0.57 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) decreased to 6.68% from 6.78%, with points increasing to 0.56 from 0.37 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
