Mortgage applications decreased last week, but that doesn’t mean the rush to buy homes is slowing down.
An index tracking those applications decreased 2.5 percent, seasonally adjusted, from the prior week, according to the Mortgage Bankers Association. Buyers are increasingly confronted with historically low inventory, which is pushing prices up, according to the MBA.
Still, the purchase index increased for the fourth consecutive week and was up 26 percent from last year’s pace.
“As both home-price growth and mortgage rates continue this upward trend, we may see affordability challenges become more severe if new and existing supply does not significantly pick up,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement.
Refinancings also dropped last week, continuing a trend that has been ongoing for some time. MBA’s index tracking refinance applications dropped 5 percent from the previous week, and is now at its slowest pace since September 2020. The average refinancing loan size was $284,200.
The 30-year fixed mortgage rate has increased by 50 basis points since the start of 2021, which may be keeping homeowners from initiative refinancings. According to Kan, there were declines in applications for both private and government loans.
The average purchase loan size increased slightly from the week prior, from $406,200 to $409,300. That reverses a weeks-long trend of declining loan prices that has been consistent throughout the month.
MBA’s survey covers 75 percent of the residential mortgage market and has been conducted weekly since 1990.