Mortgage demand fell 7.2% despite rates holding week-over-week, according to the latest data from the Mortgage Bankers Association’s weekly survey.
- Total mortgage demand fell to an index of 202.5 for the week ending January 26th, down 7.2% from the prior week and was the first drop in the last four weeks.
Purchases Fall, Refis Rise. This week’s decline was entirely thanks to the drop in purchases which fell 11% to an index of 154.5, the first drop in 4 weeks.
- Refis actually saw a slight increase to an index of 445.6, up 1.6% from the prior week and the second-highest level in the last 7 weeks.
Rates. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances held at 6.78%.
Analysis. Joel Kan, an MBA economist, pointed out that despite rates trending lower inventory is still a problem. “Low existing housing supply is limiting options for prospective buyers and is keeping home-price growth elevated, resulting in a one-two punch that continues to constrain home purchase activity,”
BOTTOM LINE: Rates can fall all they want but if there is not enough inventory high home prices will continue to keep many first-time homebuyers on the sideline.