Borrowers appear to be holding out in hopes for a rate cut, as mortgage applications fell by 3.9% overall the week ending July 26.
The amount of property owners seeking refinances experienced a particularly sharp drop, according to the Weekly Applications Survey and Market Composite Index released by the Mortgage Bankers Association (MBA).
"Mortgage rates were little changed last week, with the 30-year fixed mortgage rate unchanged at 6.82 percent," MBA's SVP and Chief Economist Mike Fratantoni said. "In recent weeks, there have been some small bursts of refinance activity, particularly for FHA and VA loans. Last week, VA refi application volume dropped sharply, which drove the aggregate result. Borrowers may be waiting for signs that mortgage rates will drift lower as the Federal Reserve begins to cut short-term rates. Purchase volume also dropped slightly because of ongoing affordability challenges.”
The overall index decreased 3.9% on a seasonally adjusted basis and 4% on an unadjusted basis compared with the previous week. The Refinance Index decreased 7% from the previous week and was 32% higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2% from one week earlier. The unadjusted Purchase Index decreased 1% compared with the previous week and was 14% lower than the same week one year ago.
Among total mortgage applications, the refinance share fell to 38.2% from 39.7%; the adjustable-rate mortgage (ARM) share decreased to 5.7%; the FHA share increased to 14.2% from 13.4%; the VA share decreased to 13.5% from 14.8%, and the USDA share increased to 0.5% from 0.4% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) remained unchanged at 6.82%, with points increasing to 0.62 from 0.59 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) decreased to 7.07% from 7.09%, with points decreasing to 0.53 from 0.54 (including the origination fee) for 80 percent LTV loans.
