Mortgage Applications Decline on Dip in Refinancing
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Key Takeaways
- Mortgage application volume decreased by 10.1%, the first decline in three weeks.
- Mortgage rates fell again to 6.5% as calculated by the Mortgage Bankers Association, the lowest level since May 2023.
- Refinancing activity dropped after surging over the past two weeks, but was still higher than a month ago.
Demand for home loans declined for the first time in three weeks despite mortgage rates dropping to the lowest levels in more than a year.
According to data from the Mortgage Bankers Association, the Market Composite Index, a gauge of the volume of home loan applications, dropped by 10.1% for the week ending Aug. 16.
While the rates on 30-year, fixed mortgages declined again this week to 6.5%, the lowest rate since May 2023, it wasn’t enough to increase homebuyer turnout.
“Both mortgage rates and mortgage applications have now stabilized after a few weeks of financial market volatility, which led to a quick drop in mortgage rates,” Kan said.
Refinancing Dips After Surging Over Past Weeks
In fact, applications for home purchases were at their lowest levels since February, said Joel Kan, MBA vice president and deputy chief economist.
“Home sales have slowed despite rising inventory levels,” Kan said. “Even with lower mortgage rates, potential buyers might be more selective now that there are more options.”
Refinancing applications declined from the prior week but were still 23% higher than levels from a month ago. As mortgage rates have fallen nearly half a percentage point over the past three weeks, many homeowners have jumped on the chance to refinance, sending mortgage demand soaring.
Mortgage rates could also be pushed lower if the Federal Reserve takes action on interest rates at its September meeting, where it’s expected to begin lowering borrowing costs for the first time in four years. The Fed’s benchmark interest rate can influence borrowing costs across the economy, including rates on mortgages, car loans, and credit cards.
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