Mortgage application volume decreased for a fourth straight week during the week ended March 26, dropping 2.2% compared with the previous week, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
Applications for refinances dropped 2% compared with the previous week and were down 32% compared with a year ago. Applications for purchases were also down 2% compared with the previous week but were up 39% compared with a year ago.
The drop was due mainly to the recent rise in mortgage interest rates but in the case of purchases, tight inventory and rising home prices also played a role.
On an unadjusted basis, total volume decreased 2% compared with the previous week.
“After seven consecutive weeks of increasing mortgage rates, the 30-year fixed rate declined 3 basis points to 3.33 percent, which is still almost half a percentage point higher than the start of this year,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Mortgage applications for refinances and home purchases both declined, but purchase activity was still convincingly higher than the pandemic-induced drop seen a year ago, as well as up six percent from the same week in March 2019.
“Many prospective homebuyers this spring are feeling the effects of higher rates and rapidly accelerating home prices,” Kan says. “Record-low inventory is pushing home-price growth at double the rate from a year ago, and even above the 10 percent growth rates seen in 2005. The housing market is in desperate need of more inventory to cool price growth and preserve affordability.”
“Higher mortgage rates continue to shut down refinance activity, as the pool of borrowers who can benefit from a refinance further shrinks,” he adds.
The refinance share of mortgage activity decreased to 60.6% of total applications, down from 60.9% the previous week.
The adjustable-rate mortgage (ARM) share of activity increased to 3.4% of total applications.
The average rate for a 30-year fixed-rate mortgage was 3.33%, down from 3.36%.
Photo: Tierra Mallorca