U.S. Mortgage Applications Continue to Decline as Interest Rates Jump
by:Tom Moeller
|in:Economy in Brief
Summary
- Purchase & refinancing applications fall.
- Effective interest rates climb to twenty-one year high.
- Average loan size falls sharply.
Mortgage applications fell 3.1% (-30.5% y/y) in the week ending August 4 after a 3.0% decline during the prior week, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. It was the third consecutive weekly decline. Applications have been trending sideways since January at the lowest level since early-1997.
Applications for purchase loans fell 2.7% (-27.0% y/y) in the latest week following a 3.2% decline in the previous week. Applications for loan refinancing fell 4.0% (-37.2% y/y) after falling 2.5% in the prior week. Both were the fifth drop in the last six weeks.
The effective interest rate on a 30-year fixed-rate loan of 7.29% last week rose sharply from 7.13% in the prior week. Its most recent high of 7.42% occurred in the third week of October 2022. Thirty-year fixed rates are up from a low of 6.46% in the first week of April. The rate on a 15-year fixed-rate mortgage of 6.74% compared to 6.59% in the previous week. The rate on a 30-year Jumbo loan jumped to 7.23% from 7.06% in the prior week. The rate on a 5-year ARM loan climbed to 6.80% from 6.61% in the July 28 week.
The share of applications for refinancing an existing loan eased to 28.7% of total applications in the week of August 4 from 28.9% in the prior week. It remained close to the highest share since the last week of March. The adjustable-rate mortgage (ARM) share of activity of 6.9% in the latest week compared to 6.5% in the prior week.
The average size of a mortgage loan fell to $370,600 (-1.1% y/y) last week, down from a high of $395,000 in the first week of May. It remained higher than the average of $347,600 at the end of last year. The average size of a purchase loan dropped to $416,400, after falling to $423,400 in the prior week. It was unchanged y/y. The average size of a loan to refinance a mortgage was little changed last week at $256,800 (-10.2% y/y).
The Mortgage Bankers Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYS database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
