Mortgage Purchases Jump as Rates Decline

Mortgage activity is on the rise in June, ahead of an expected change of course by the Federal Reserve.

The seasonally adjusted purchase index increased 8 percent from the previous period in the week ending on June 9, according to the Mortgage Bankers Association’s weekly survey. The unadjusted purchase index increased 17 percent week-over-week, but was down 27 percent from last year.

Refinancing activity increased 6 percent from the previous period and was down 41 percent year-over-year, reflecting how homeowners aren’t inclined to refinance their mortgages with rates significantly higher than they were this time last year.

Mortgage rates declined for the second consecutive week. The average contract 30-year fixed-rate mortgage with conforming loan balances ($726,200 or less) fell modestly from 6.81 percent to 6.77 percent.

While the common mortgage type saw a slight rate decline, rates for jumbo loans took a different path. The interest rate for an average contract 30-year fixed-rate jumbo loan mortgage increased last week from 6.74 percent to 6.79 percent.

Elevated rates aren’t the only factor constraining homebuying activity. MBA deputy chief economist Joel Kan said in the report low for-sale inventory also continues to plague the market.

The VA share of total mortgage applications increased from 12.5 percent from 12.6 percent, while the USDA’s share increased from 0.4 percent to 0.5 percent week-to-week. The FHA’s share decreased from 13.2 percent to 13 percent.

The average contract interest rate for a 15-year, fixed-rate mortgage stayed static at 6.25 percent.

Wednesday could prove to be an important day in the mortgage world, with the Federal Reserve set to hold a policy meeting and update rate forecasts. While not directly tied to mortgage rates, interest rates cast a heavy shadow on the mortgage market; the Fed is widely expected to pause rate hikes.