Total mortgage demand fell for the second straight week with a 1.2% drop, according to the Mortgage Bankers Association weekly survey…(MBA)
- REFI: The Refinance Index was down 4% from last week and is now down 75% year-over-year.
- PURCHASE: The Purchase Index was down 1.0% from last week and is now down 16% year-over-year.
NOTE: The refinance share of mortgage activity decreased to 32.3% of total applications from 33.0% the previous week and the ARM share of activity decreased to 9.4% of total applications.
Unusually when demand falls rates move up that was not the case this week…
- 30-YR FIXED: The average contract interest rate fell 3 basis points to 5.46%, this is 228 basis points higher than one year ago.
- 15-YR FIXED: The average contract interest rate fell 1 basis point to 4.72%, this is up 219 basis points higher than one year ago.
- 5/1 ARM: The average contract interest rate actually increased 7 basis points to 4.49%, this is 169 basis points higher than one year ago.
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, notes that even though refis are down year-over-year most of the decline has happened in the last 5 months…
- “Most refinance borrowers continue to remain on the sidelines as a result, and refinance applications have fallen in nine of the past 10 weeks. Compared to January 2022, refinance activity is down 66 percent,”
There are signs all over the place that the housing cooldown is upon us. We have falling mortgage demand even with dropping rates. New home sales plummeted yesterday and we have inventory levels rising. It looks like the answer to what level rates need to hit to cause a slowdown might be right in front of us.