After increasing for the previous four weeks, mortgage applications fell 4.1% during the week ended March 31, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances decreased 5% from the previous week and were down 59% compared with the same week one year ago.
Applications for purchases decreased 3% compared with the previous week and were down 35% compared with the same week one year ago.
“Spring has arrived, but the housing market is missing the customary burst in listings and purchase activity that typically mark the season,” says Mike Fratantoni, senior vice president and chief economist for the MBA, in a statement. “After four weeks of increasing purchase application activity, volume declined a bit this week even with another small drop in mortgage rates.
“Additionally, refinance application volume continues to be quite low,” Fratantoni says. “Although the mortgage rate for conforming balance loans declined by five basis points over the week to 6.40 percent, the mortgage rate for jumbo loans increased by nine basis points to 6.36 percent.
“While we have seen relative weakness at the high end of the housing market in recent months, the divergence in rates suggests that banks may be tightening credit in response to recent challenges, preserving balance sheet capacity as deposit balances have declined,” Fratantoni adds. “In recent years, most jumbo loans have been kept on depository balance sheets.”
The FHA share of total applications decreased to 12.0%, while the VA share fell to 11.0% and the USDA share increased to 0.6%.
“At the entry-level segment of the market, purchase applications for both FHA and VA loans decreased last week,” Fratantoni says. “We do expect strong demand from first-time homebuyers over the next several years given the large number of millennials hitting peak first-time homebuyer age, but affordability remains a real challenge in this environment.”
The refinance share of mortgage activity decreased to 28.6% of total applications, down from 29.1% the previous week.
The adjustable-rate mortgage share of activity decreased to 7.2%.