Fewer Americans are applying for mortgage loans as rates rise again.
Mortgage applications dropped by 5.7% last week compared to a week prior, according to the latest Market Composite Index, a measure of mortgage loan application volume, published by the Mortgage Bankers Association (MBA) on Wednesday.
This comes as mortgage rates increased for the first time in four weeks. The average interest for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less popped back up to 7.05% from 7.01%. For so-called “jumbo loan balances” (greater than $766,550), the average 30-year fixed-rate increased to 7.22% from 7.18%.
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“Both purchase and refinance applications fell, pushing overall activity to the lowest level since early March,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement accompanying the report. “Borrowers remain sensitive to small increases in rates, impacting the refinance market and keeping purchase applications below last year’s levels.”
Demand for refinancing — trading in an old loan for a new one, usually accomplished by paying off an old mortgage with a new one — fell 14%, but stayed 12% higher than the same week last year. And demand for mortgage applications to purchase a home ticked down 1% from a week prior.
Kan added that the limited inventory of existing homes and high home prices are also making it difficult for prospective home buyers to find properties that meet their needs.
Total housing inventory at the end of April rose 9% month-over-month to 1.21 million units, and up 16.3% from one year ago, according to the National Association of Realtors. Much of this growth was driven by homes priced at $1 million or more. In April, the median existing home price in the U.S. was $407,600.
