A decline in loan application activity might be a result of rising coronavirus cases, as well as the delay of a new COVID-relief package.
Mortgage applications dropped by 5.1% from the previous week during the week ending July 31, according to the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey.
That’s another record low, “falling below the previous record set three weeks ago to 3.14 percent,” MBA’s AVP of Economic and Industry Forecasting Joel Kan said.
“Refinance activity decreased—despite the decline in rates—but the current pace remains more than 80% higher than a year ago when rates were over 4%”
Further details from the MBA survey show that the Market Composite Index, which measures mortgage loan application volume, decreased by 5.1% on a seasonally adjusted basis from the week before. On an unadjusted basis, the index decreased 5%. The Refinance Index dropped 7% from one week ago and was 84% higher year over year.
Meanwhile, the seasonally adjusted Purchase Index, as well as the unadjusted Purchase Index, dropped 2% from the previous week.
The unadjusted Purchase Index was 22% higher year-over-year.
Realtor.com’s Chief Economist Danielle Hale offers some insight into the numbers:
“Despite a perfect storm of near-record-low mortgage rates and a growing wave of young households ready for ownership, homebuyer interest has pushed past last year’s levels. However, purchase mortgage applications decreased this week, a sign that buyer confidence may be waning due to concerns over the sustained spread of COVID-19 and its continued drag on the economy, as well as uncertainty over a potential second round of government stimulus.”
Hale added that, against this backdrop, buyers will find a competitive landscape, with rising home prices and a highly limited number of homes for sale.
"Additionally, any homes that buyers do find are likely to sell quickly—because of these trends, buyers need to be prepared to act fast. Sellers can take advantage of the buyer momentum by listing now when they are likely to see less competition and more demand than last year.”