A perfect storm of problems for home buyers — lack of inventory, high prices and bidding wars — may finally be putting pressure on mortgage applications.
An index tracking those applications decreased 2.2 percent, seasonally adjusted, from one week earlier, according to the Mortgage Bankers Association. It’s the second week in a row that applications dipped. Mortgage rates, meanwhile, have been rising steadily for seven consecutive weeks.
“Many prospective homebuyers this spring are feeling the effects of higher rates and rapidly
accelerating home prices,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “The housing market is in desperate need of more inventory to cool price growth and preserve affordability.”
Similarly, the refinance index decreased 3 percent from the previous week and was 32 percent lower than the same week one year ago. Refinancings made up nearly 61 percent of total applications. The average refinancing loan size was $275,000, a dip from last week’s $284,200.
“Higher mortgage rates continue to shut down refinance activity, as the pool of borrowers
who can benefit from a refinance further shrinks,” Kan added.
The average purchase loan size dropped to $401,400, from $409,300. Loan sizes had been steadily decreasing until last week, when that figure rose by nearly 4 percent.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 3.33 percent from 3.36 percent. Jumbo loans also saw a dip, from 3.40 percent to 3.34 percent.
MBA’s survey covers 75 percent of the residential mortgage market and has been conducted weekly since 1990.