Mortgage application volumes dropped off in the runup to the Fourth of July holiday as much of the country faced multiple days of record-breaking heat and elevated mortgage rates continued to hamper home purchase affordability.
The Mortgage Bankers Association’s Market Composite Index, a measure of mortgage loan application volume, declined 2.2% over the seven days ending July 3, with the seasonally adjusted refinance and purchase component indices retreating 4% and 1% respectively.
“After adjusting for the Independence Day holiday, government purchase volume increased modestly,” said Joel Kan, deputy chief economist of the MBA, in commentary accompanying the updated application figures, published Wednesday. He noted that convention purchase activity declined.
Mortgage rates for 30-year fixed-rate home loans increased slightly to 6.58%, spending their eighth straight week above 6.5%, according to MBA data. Experts say inflationary impacts of the Iran war, federal deficit concerns, a leadership shakeup at the Federal Reserve and resilient employment conditions support rates moving even higher in coming weeks and months.
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Declining incentives for refinance candidates pushed their share of overall application activity down to 40.6% from 41.4% the previous week. The unadjusted refinance index was still 8% higher than a year ago.
The unadjusted purchase index, meanwhile, remained 5% higher than a year ago. Purchase application volumes surpassed year-ago levels on a weekly basis through most of the second quarter, MBA has separately said, despite tolls on purchasing power and consumer confidence exacted by the Iran war.
Concerning the rise in government purchase loan volume cited by Kan, total applications for mortgages insured by the Federal Housing Administration (FHA) fell to 16.4% from 16.9% the previous week. The share of applications for loans backed by the Department of Veterans Affairs rose to 13% from 12.9%.
The average interest rate for 30-year fixed-rate mortgages backed by the FHA rose to 6.28% from 6.27% over the week.
