Mortgage Demand Falls 3.7% for the Week

Mortgage demand continued its downward trajectory with a big 3.7% drop off in total demand for the week ending August 26th according to the Mortgage Bankers Association weekly survey.

  • The Purchase Index fell 2% from the previous week and is now 23% lower than the same time one year ago.
  • The Refinance Index decreased 8 percent from the previous week and was is now 83% lower than the same time one year ago.

NOTE: The refinance share of mortgage activity decreased to 30.3% of total applications and the adjustable-rate mortgage share of activity increased to 8.5%.

Rates continue to climb. Mortgage rates were up for the second week in a row putting downward pressure on demand. The 30-year fixed average contract interest rate increased 15 basis points to 5.80%for the week ending August 26th which is 273 basis points higher than one year ago.

  • The 15-year fixed was up 9 basis points to 5.10% and the 5/1 ARM was actually down 3 basis points to 4.81%.

Joel Kan, MBA economist, said that volume remains at a two-decade low but there is some hope on the horizon. “Application volume dropped and remained at a multi-decade low last week, led by an 8 percent decline in refinance applications, which now make up only 30 percent of all applications. Purchase applications have declined in eight of the last nine weeks, as demand continues to shrink due to higher rates and a weaker economic outlook. However, rising inventories and slower home-price growth could potentially bring some buyers back into the market later this year.”