Mortgage applications fell last week, mostly due to a decline in homeowners seeking refinancing.
The Mortgage Bankers Association’s weekly refinance index dropped 7 percent seasonally adjusted for the week ending Sept. 25. The metric tracks the volume of refinancing applications filed each week across the country.
Joel Kan, MBA’s head of industry forecasting, attributed the drop to lenders “working through operational challenges, ultimately limiting the number of applications they are able to accept,” he said in a statement.
A spokesperson for Kan clarified that the challenges he was referring to include staff shortages, remote work and tightening credit rules due to uncertain economic conditions.
Kan also said another possible factor for the drop in refinance applications may be due to refi rates not decreasing to the same extent as purchase loan rates, which MBA ascertained from feedback from lenders and its internal data.
Despite last week’s decline, however, refinancing application volume was up 52 percent year over year, indicating continued robust demand from homeowners.
MBA’s index following the volume of purchase applications also dropped by an adjusted 2 percent last week, though it also remained 22 percent higher than a year ago. It’s the 19th consecutive week the purchase index has reported annual growth.
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Rates for an average 30-year, fixed-rate mortgage fell 5 basis points to 3.05 percent, a record low for MBA’s weekly survey, which has been running since 1990 and monitors 75 percent of the residential mortgage market. The average jumbo rate dropped 2 basis points to 3.33 percent.
Kan noted that the average purchase loan size was $370,700 last week, just shy of the survey’s record of $371,000 from the previous week, indicating continued activity “in the higher price tiers.”
The median price to buy a home exceeded $300,000 for the first time ever in July as the national supply of homes available for purchase dwindled to a 40-year low in the same month.
Demand has not lessened despite higher prices, however. In August, home sales for both existing and newly-built homes reached 14-year highs.