High Rates Still Discourage Purchases

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High Rates Still Discourage Purchases

Aug 3, 2023 | News | 0 comments

For the week ending on July 24th, mortgage application volume slightly decreased from the prior week. Unchanging interest rates had little impact on refinancing, and home purchase volume also dropped. The Mortgage Bankers Association reported a 1.8 percent seasonally adjusted decrease in the Market Composite Index compared to the previous week and a 1.5 percent decrease without adjustment.

Joel Kan, Vice President and Deputy Chief Economist at the MBA, noted, Mortgage rates remained largely unchanged last week but stayed high at 6.87 percent for the 30-year fixed rate, resulting in fewer mortgage applications. Purchase activity dropped by 2.5 percent, partially due to a 10 percent decrease in FHA applications. This decline pushed the purchase index to its lowest point in over a month and contributed to a higher average purchase loan size at $432,700, the highest since May. Refinance applications remained weak, lagging 30 percent behind the previous year. With persistent affordability challenges and prevailing rates, many borrowers are opting to wait on the sidelines.

Notable points from the MBA’s Weekly Mortgage Application Survey

Changes in the previous week included larger loan sizes, rising from $372,900 to $383,100, along with an increase in the average purchase mortgage size to $432,700 from $418,600.

The FHA’s share of total applications decreased to 12.7 percent from 13.6 percent, while the VA share stayed at 12.1 percent. USDA loans remained at 0.5 percent.

For conforming 30-year fixed-rate mortgages (FRM), the average rate was unchanged at 6.87 percent, with points decreasing from 0.66 to 0.65.

The jumbo 30-year FRM rate increased to 6.90 percent from 6.89 percent, with unchanged points at 0.64.

The average rate for 30-year FRMs backed by the FHA slightly rose to 6.80 percent, with points decreasing to 1.03 from 1.12.

The rate for 15-year FRMs ticked up 1 basis point to 6.37 percent, with points moving from 0.72 to 0.75.

The average contract rate for 5/1 adjustable-rate mortgages (ARMs) decreased to 6.01 percent, while points increased to 1.25 from 0.91.

The ARM share of total applications dropped to 5.9 percent from the previous week’s 6.3 percent.