Mortgage Applications Decrease Again, Volatile Rates, Stagnant Inventories

The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, decreased 4.6 percent on a seasonally adjusted basis during the week ended May 19 and was 5 percent lower than the previous week on an unadjusted basis. It was the second consecutive weekly decline. The Refinance Index was down 5 percent and was 44 percent lower than the same week one year ago. The refinance share of applications was unchanged at 27.4 percent.   [refiappschart] The seasonally adjusted Purchase Index fell 4 percent . The unadjusted version was 5 percent lower week-over-week and 30 percent lower on an annual basis. [purchaseappschart] “ Mortgage applications declined almost five percent last week as borrowers remained sensitive to higher rates . The 30-year fixed rate increased to 6.69 percent, the highest level since March,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Since rates have been so volatile and for-sale inventory still scarce, we have yet to see sustained growth in purchase applications. Refinance activity remains limited, with the refinance index falling to its lowest level in two months and more than 40 percent below last year’s pace.”  Kan added, “Investors remained attuned to the uncertainty around the U.S. debt ceiling and communication from several Federal Reserve officials last week, which sent Treasury yields higher, along with mortgage rates. Economic data released over the past week have also pointed to a still-resilient economy. The housing market received positive data on new residential construction – which is seen as a key solution to the lack of housing inventory.”
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