The volume of applications for home loans fell again last week, due to a weak job market and tightening credit rules.
The weekly survey tracking purchase loans saw a seasonally adjusted decline of 2 percent in the final week of July.
The Mortgage Bankers Association metric, known as the purchase index, is still up 20 percent year over year, according to Joel Kan, head of MBA’s industry forecasting. It marks the eleventh week of consecutive annual increases, though weekly volume fell during the last two weeks of July.
Kan noted that purchase loan size is increasing. The average loan size was $366,500 last week, up from $364,600 last week. He said it could be “a sign that the still-weak job market and tighter credit for government loans are constraining some first-time homebuyers.”
Refinance activity also dropped last week. MBA’s seasonally adjusted refinance index declined 7 percent compared to the previous week, though it was up 84 percent from the same week in 2019.
The decline came even as rates continued to sink to yet another record low in the history of MBA’s weekly survey, which has been conducted since 1990 and covers 75 percent of the U.S. residential market.
The average rate for a 30-year, fixed-rate mortgage was 3.14 percent last week, down from 3.20 a week earlier. Jumbo rates dropped 1 basis point to 3.51 percent.
Kan said he expects rates to remain low and that, in turn, will ultimately drive applications to refinance.
MBA’s overall index of all home loan applications fell 5.1 percent, seasonally adjusted, from the prior week.
Write to Erin Hudson at [email protected]