Mortgage applications slid slightly this week, dropping 2.5% over the previous week as found by the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
Also dropping slightly were the share of mortgage refi applications, decreasing 1% from the previous week to 60.6% of total applications, and 18% lower than one year ago.
"Mortgage applications decreased last week, even as mortgage rates dropped for the third week in a row. The 30-year fixed rate was down three basis points to 3.17%, which is still 32 basis points higher than the low reported in December 2020,” said Joel Kan, MBA's Associate VP of Economic and Industry Forecasting. “Even with a few weeks of lower rates, most borrowers have likely already refinanced, which is why activity has decreased in seven of the last eight weeks. The purchase market's recent slide comes despite a strengthening economy and labor market. Activity is still above year-ago levels, but accelerating home-price growth and low inventory has led to a decline in purchase applications in four of the last five weeks."
Despite mortgage rates dropping below the 3% mark last week, the seasonally-adjusted Purchase Index decreased 5% from one week earlier. The unadjusted Purchase Index decreased 4% compared to the previous week, and was 34% higher than the same week one year ago.
By type, the FHA share of total applications decreased to 10.7% from 11.3% the week prior. Rising for the week was the VA share of total applications, increasing to 12.2% from 11.5% the week prior. The USDA share of total applications remained unchanged at 0.4% the week prior.
Zillow recently reported that while there is a continued demand for homes, which pushed “for-sale” inventory down 1.1% in March, the monthly decline was the smallest seen since July 2020, thanks to an influx of new inventory (rising 30% from late February to late March).
However, more homes on the market do not mean they are primed for affordability, as Redfin found median home-sale prices increasing 18% year-over-year to $344,625, an all-time high in March 2021, with asking prices reaching a high of $356,175.