Mortgage demand continued its downward trajectory for the fourth week in a row, barely, with total demand falling 0.8%, according to the Mortgage Bankers Association weekly survey.
- Purchase demand fell 1.0% for the week and is now down 23% when compared to the same time last year.
- Refi demand fell 2.0% for the week and is now down 83% when compared to the same time last year.
Breakdown. The refinance share of mortgage activity increased slightly to 30.7% while the adjustable-rate mortgage share of activity remained unchanged at 8.5% of total applications.
Rising rates. Rising rates continue to put downward pressure on mortgage demand, as was the case this week, with the 30-year fixed rising 14 basis points to 5.94% for the week ending September 2nd and is now up 291 basis points from the same time last year.
- The 15-year fixed was up 13 basis points to 5.23% and the 5/1 arm was up 3 basis points to 4.81%.
Silver lining. Mike Fratantoni, Chief Economist at MBA, noted that the labor market could be a bright spot for housing demand. “…the strong job market depicted in the August data should support housing demand. There is no sign of a rebound in purchase applications yet, but the robust job market and an increase in housing inventories should lead to an eventual increase in purchase activity.”
- Unfortunately, he also thinks rates aren’t significantly dropping anytime soon. “With the 30-year fixed rate rising to the highest level since mid-June, application volumes for both purchase and refinance loans dropped. Recent economic data will likely prevent any significant decline in mortgage rates in the near term…”