Mortgage applications fall to six-month low

Mortgage applications have fallen to a six-month low, according to data from the Mortgage Bankers Association (MBA).

“The purchase market continued its recent slump, with the index decreasing for the sixth time in seven weeks to its lowest level since May 2020,” Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting, said in a statement. “Homebuyer demand is still strong overall, and activity was up 16.5 percent from a year ago.

“However, inadequate housing supply is putting upward pressure on home prices and is impacting affordability – especially for first-time buyers and lower-income buyers.”   

According to MBA’s weekly mortgage applications survey, mortgage loan application volume fell 0.5 percent on a seasonally-adjusted basis from one week earlier. The purchase index, which includes all applications for a single-family home, was also down 3 percent. 

Loan amounts reached new highs in the last several weeks due to rising home prices and stronger activity on the higher-end of the market, CNBC notes. Low rates, which would normally offset these prices, are now causing them in-part. 

According to MBA, the average contract interest rate for 30-year fixed-rate mortgages with loan balances up to $510,400 decreased to 2.98 percent from 3.01 percent, a new survey low, with points decreasing to 0.35 from 0.38 percent for loans that require a deposit of 20 percent. 

The refinance index also increased 1 percent from the previous week, and was 67 percent higher than the same week one year ago.

However, mortgage rates have increased back to preelection levels since the 2020 presidential election was called for President-elect Joe Biden, according to Mortgage News Daily. Thirty-year fixed rates are now 0.125 percent higher than they were last Thursday.