Mortgage application volume dropped 10.1% during the week ended August 16, despite mortgage rates dipping slightly lower, according to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey.
During the week, the average rate for a 30-year, fixed-rate mortgage decreased to 6.5%, down from 6.54% the previous week.
The dip was primarily due to a drop in applications for refinances, which surged 35% the previous week as rates tumbled.
Last week, however, mortgage rates were basically flat – and as a result, applications for refinances slowed significantly.
Applications for refinances decreased 15% compared with the previous week but were up 90% compared with the same week one year ago.
Applications for purchases decreased 5% compared with the previous week and were down 8% compared with the same week one year ago.
“Both mortgage rates and mortgage applications have now stabilized after a few weeks of financial market volatility, which led to a quick drop in mortgage rates,” explains Joel Kan, vice president and deputy chief economist for the MBA, in a statement. “Applications were lower last week, led by a 15 percent decrease in refinance activity despite the 30-year fixed mortgage rate declining for the third consecutive week to 6.5 percent, the lowest since May 2023.
“The level of refinance applications remains 23 percent higher than a month ago and the past two weeks have seen the strongest weekly readings since 2022, as borrowers have sought lower rates. FHA refinance applications bucked the trend and increased for the sixth straight week,” Kan says.
“Purchase applications also declined last week, reaching the lowest level since February 2024,” he adds. “Home sales have slowed despite rising inventory levels. Even with lower mortgage rates, potential buyers might be more selective now that there are more options.”
The refinance share of mortgage activity decreased to 46.3% of total applications, down from 48.6% the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 5.5% of total applications.
Photo: Romain Dancre