Mortgage applications decreased 0.8 percent week over week, even as rates stayed near historic lows, according to the latest data released Wednesday by the Mortgage Bankers Association (MBA). The decrease was fueled partially by an increase in the loan rates for mortgages secured through the Federal Housing Administration (FHA).
MBA’s refinance index was down 0.4 percent week over week, but up 121 percent year over year. The seasonally-adjusted purchase index was down 2 percent, while the unadjusted purchase index was down 1 percent week over week and up 21 percent year over year.
“Mortgage rates remained near record lows for conventional loans last week, and refinances in the conventional sector continued to slightly increase,” Mike Fratantoni, MBA’s senior vice president and chief economist, said in a statement. “However, rates on FHA loans rose, leading to an almost 18 percent drop in FHA refinances,”
“Homebuyers stepped back slightly, and there was a larger drop in purchase application volume for FHA, VA, and USDA loans,” Fratantoni added. “This trend, along with the fact that average loan sizes are increasing, indicate that prospective first-time buyers are being impacted more by the rising economic stress caused by the resurgence in COVID-19 cases, as well as the uncertainty on how the next round of government support will take shape.”
The average interest rate for 30-year fixed-rate mortgages — under $510,400 — remained unchanged at 3.20 percent.
