The Mortgage Bankers Association (MBA) reported that the Market Composite Index, a metric used to measure the volume of mortgage loan applications, declined by 4.6 percent on a seasonally adjusted basis during the week ending May 19th. Compared to the previous week, the index was 5 percent lower on an unadjusted basis. This decline marked the second consecutive week of decrease.
During the same week one year ago, the Refinance Index witnessed a 44 percent decline, and in the current week, it experienced a 5 percent decrease. The share of applications for refinancing remained constant at 27.4 percent.
The Purchase Index, after being adjusted for seasonal variations, dropped by 4 percent. On an unadjusted basis, it was 5 percent lower compared to the previous week and showed a significant decline of 30 percent when compared to the same period last year.
Joel Kan, Vice President and Deputy Chief Economist of the MBA reported that mortgage applications experienced a nearly five percent decline in the previous week. Borrowers remained cautious due to higher interest rates. The 30-year fixed rate rose to 6.69 percent, reaching its highest point since March. Despite the fluctuating rates and limited availability of homes for sale, there hasn’t been consistent growth in purchase applications. Furthermore, there were limitations in refinancing activity, as indicated by the refinance index reaching its lowest point in two months and being over 40 percent lower compared to the rate observed in the previous year.
Furthermore, Kan stated that investors were paying close attention to the uncertainty surrounding the U.S. debt ceiling and the statements made by multiple Federal Reserve officials during the previous week. These factors contributed to the increase in Treasury yields and subsequently led to higher mortgage rates. Additionally, economic data released during that period indicated that the economy was still demonstrating resilience. The housing market received positive news regarding new residential construction, which is considered a significant remedy for the shortage of available housing inventory.