Refinancing activity and mortgage rates were down last week, while new purchases held relatively steady — but both figures are still much higher than a year ago.
The index tracking volume of mortgage applications to buy homes each week, known as the purchase index, decreased a seasonally adjusted 0.2 percent from the previous week.
The metric, from the Mortgage Bankers Association, was 28 percent higher than it was the same time last year, marking the 15th straight week of year-over-year gains.
“Mortgage rates have remained below 3.5 percent for five months now, and it’s possible that refinance demand may be slowing and will not significantly increase again without another notable drop in rates,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement.
Last week, the Federal Reserve signaled that it will maintain low rates for the long haul, keeping the cost of borrowing low for potential homeowners. But that can drive up prices, too, as more buyers enter the housing market.
The continued growth in purchase applications reflects an increase in demand for homes as workers shift to home offices and grapple with whether to send their children back to school or keep them home. The new dynamic has led some to question the preference of living in dense urban areas.
An MBA index that tracks refinance applications fell an adjusted 3 percent last week, but still remains 40 percent higher than it was last year.
The decrease comes after Freddie Mac and Fannie Mae, government-sponsored entities that securitize mortgages, announced new fees for refinancings. The move was met with dismay from the mortgage industry, and accusations that the agencies are trying to benefit from consumer activity rather than support affordability. The new fee, slated to begin in September, was instead delayed until Dec. 1.
The average 30-year, fixed-rate mortgage fell to 3.08 percent from 3.11 percent for conforming loans, or loans less than $510,400. Jumbo rates remained unchanged at 3.41 percent.
Overall, mortgage activity fell by a seasonally adjusted 2 percent from the week prior. Refinancing applications make up 62.5 percent of the surveyed loans.
MBA’s weekly survey of mortgage loans, which has been conducted since 1990, covers 75 percent of the U.S. residential mortgage market.