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Mortgage App Volume Takes a Dive

The Mortgage Bankers Association (MBA) is reporting that mortgage application volume decreased 6.9% from the previous week, according to the latest Weekly Mortgage Applications Survey.

The Refinance Index also decreased this week, dropping 8% from the previous week, and was 15% lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 5% from one week earlier, while the unadjusted Purchase Index decreased 6% compared to the previous week, and was 17% lower than the same week one year ago.

"Mortgage application volume fell to the lowest level in almost a year-and-a-half, with declines in both refinance and purchase applications. Mortgage rates were volatile last week, as investors tried to gauge upcoming moves by the Federal Reserve amidst several divergent signals, including rising inflation, mixed job market data, strong consumer spending, and a supply-constrained housing market that has led to rapid home-price growth," said Mike Fratantoni, MBA's SVP and Chief Economist. "Purchase applications for conventional loans declined last week to the lowest level since last May. The average loan size for total purchase applications increased, indicating that first-time homebuyers, who typically get smaller loans, are likely getting squeezed out of the market due to the lack of entry-level homes for sale."

Refi volume remains abundant, yet down slightly over the previous week, with the refinance share of mortgage activity decreasing to 61.9% of total applications, down from 62.5% the previous week.

By loan type, the FHA share of total applications remained unchanged from 9.5% the week prior. The VA share of total applications decreased to 10.5% from 11.2% the week prior, and the USDA share of total applications remained unchanged at 0.5%, the same as the week prior.

As mortgage apps begin to tail off, home prices continue to show gains, with S&P CoreLogic Case-Shiller’s U.S. National Home Price NSA Index finding a 14.6% annual gain in April, up from 13.3% the previous month.

Factors such as bidding wars and the aforementioned record high prices are forcing many to the sidelines, re-considering their home purchase options. However, it appears that rates at all-time lows are keeping them in the game.

"While these hurdles have contributed to pricing out some would-be buyers, the record-high aggregate wealth in the country from the elevated stock market and rising home prices are evidently providing funds for home purchases,” said Lawrence Yun, NAR's Chief Economist. "More market listings will appear in the second half of 2021, in part from the winding down of the federal mortgage forbearance program and from more home building.”

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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