Mortgage applications fell 0.5% last week on a seasonally adjusted basis, the second consecutive week of declines according to the Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey.
The Market Composite Index, a measure of mortgage loan application volume, decreased 2% on an unadjusted basis for the week ending Aug. 22 as mortgage rates rose for the second consecutive week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances — defined as $806,500 or less — nudged upward to 6.69% from 6.68%, according to MBA data. The average contract interest rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration (FHA) decreased to 6.35% from 6.39%.
Despite the slight uptick in borrowing costs, the seasonally adjusted Purchase Index notched its strongest week in more than a month, increasing 2% from the previous week.
“Prospective buyers appear to be less sensitive to rates at these levels and are more active,” remarked Joel Kan, vice president and deputy chief economist at the MBA, in a press release. He described home shoppers as “bolstered by more inventory and cooling home-price growth in many parts of the country.”
The unadjusted Purchase Index decreased 0.1% compared with the previous week but climbed 25% higher than the same week one year ago. Average loan size reached its highest level in two months at $433,400.
The MBA noted that the slight uptick in mortgage rates was enough to trigger a pullback in refinance applications. The Refinance Index fell 4% from the previous week but was 19% higher than the same week one year ago.
The refinance share of mortgage activity decreased to 45.3% of total applications from 46.1% the previous week, while the FHA share of total applications remained unchanged at 19.1% and the adjustable-rate mortgage share of activity decreased to 8.4% of total applications.
The Veterans Affairs share of total applications decreased to 13.3% from 13.4% the week prior. The U.S. Department of Agriculture share of total applications decreased to 0.5% from 0.6% the previous week.
