Mortgage Apps Aren’t Budging, Even for Low Rates

July 26, 2017

Mortgage rates dropped to the lowest averages in a month last week. But home buyers didn’t take the bait.

Total mortgage application volume eked out just a 0.4 percent increase last week on a week-over-week, seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday. Mortgage application volume remains down 22 percent compared to a year ago.

Meanwhile, the average 30-year fixed-rate mortgage fell to 4.17 percent last week, the MBA reports. Rates averaged 4.22 percent the week prior.

"As the number of borrowers who could still benefit from a refinance continues to decline, it will take larger and larger rate drops to make a significant impact in refinancing volume," says Mike Fratantoni, chief economist for the MBA.

Refinance applications, however, did increase 3 percent last week. But they remain down by 41 percent compared to a year ago, the MBA reports.

Mortgage applications for home purchases dropped 2 percent last week. Seasonally adjusted, that is the lowest level for home purchase applications since May, the MBA reports. Inventory challenges is a likely culprit. The National Association of REALTORS® reported earlier this week that existing-home sales dropped in June due to the limited number of homes for-sale. That has also caused home prices to rise to record highs and weakened affordability. 

Source: “Lowest Mortgage Rates in a Month Barely Boost Weekly Applications, Up 0.4%,” CNBC (July 26, 2017)