Refinancing activity plummeted last week while applications to purchase homes remained flat — and substantially higher than a year ago.
An index tracking the volume of mortgage applications to buy homes each week, known as the purchase index, fell 0.4 percent, seasonally adjusted, from the prior week.
The metric, from the Mortgage Bankers Association, was up 33 percent year-over-year, however, marking the 14th consecutive week of annual gains.
The year-over-year growth in applications to buy homes reflects a broad surge in demand. In July, existing home sales jumped with the median price hitting a new high of $300,000. Homebuilding also spiked — so much so that it drove up lumber prices.
An MBA index that tracks applications to refinance fell by an adjusted 10 percent compared to the second week of August, though it remained up 34 percent year-over-year.
The refi index’s fall comes as Freddie Mac and Fannie Mae’s new refinancing fee looms. The government agencies announced this month they will begin charging lenders 0.50 percent on refi loans, which MBA estimates will add $1,400 to the average homeowner’s bill. The fee was initially scheduled to take effect in September but the Federal Housing Finance Agency on Tuesday delayed implementation to December.
The average 30-year, fixed-rate mortgage fell to 3.11 percent from 3.13 percent for conforming loans. Jumbo rates were unchanged at 3.41 percent.
Because of the drop in refi activity, MBA’s index of all mortgage applications fell by a seasonally adjusted 6.5 percent from the prior week. Refinancing applications made up nearly 63 percent of the surveyed loans.
MBA’s weekly survey of mortgage applications, which dates back to 1990, covers 75 percent of the U.S. residential mortgage market.
Write to Erin Hudson at [email protected]