Mortgage services.

Interest rates continued their slow decline last week while application volume is inching up almost as slowly. The Mortgage Bankers Association (MBA) reports a 1.6 percent increase in its seasonally adjusted Market Composite Index , a measure of mortgage loan application volume. On an unadjusted basis, the Index gained 0.2 percent over the prior week. Applications for home purchase financing took the lead, rising 3.0 percent on a seasonally adjusted basis and was up 1.0 percent before adjustment. The Purchase Index has now narrowed what was once a double-digit deficit to a -4.0 percent year-over-year gap. [purchaseappschart] The Refinance Index decreased 0.3 percent from the previous week and was 94 percent higher than the same week one year ago. Refinance applications made up 46.4 percent of the total, down from 46.6 percent the previous week. [refiappschart] “Most mortgage rates moved lower last week, with the 30-year fixed rate edging down slightly to 6.43 percent. Purchase applications increased more than 3 percent over the week and are inching closer to last year’s levels, with government purchase applications leading the increase,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “ Refinance applications were slightly down but continued to show strong annual gains as borrowers with higher rates have been refinancing to lower their monthly payments. Similar to purchase activity, refinance activity has picked up across the various loan types.” 

Home sale numbers continue to retreat and in July the National Association of Realtors’® (NAR) Pending Home Sales Index (PHSI) fell to its lowest level…. Ever! Based on signed sales contracts for existing single-family houses, townhomes, condos, and cooperative apartments, the PHSI was down 5.5 percent from June to 70.2. This is 8.5 percent lower than the index for July 2023. [pendinghomesdata] The PBHSI is considered a leading indicator of home sales over the next one to two months. NAR cautions, however, that the amount of time between pending contracts and completed sales is not identical for all home sales. Variations in the length of the process from pending contract to closed sale can be caused by issues such as buyer difficulties with obtaining mortgage financing, home inspection problems, or appraisal issues. The index was benchmarked at 100 in 2001, a year in which contract activity was considered average.     “A sales recovery did not occur in midsummer,” said NAR Chief Economist Lawrence Yun. “The positive impact of job growth and higher inventory could not overcome affordability challenges and some degree of wait-and-see related to the upcoming U.S. presidential election.” The index fell month-over-month in all four major regions. The Northeast slid 1.4 percent to 64.6 but did pull off a 2.4 percent gain from the previous July. In terms of home sales and prices, the New England region has performed relatively better than other regions in recent months ,” added Yun. “Current lower, falling mortgage rates will no doubt bring buyers into market.”

The mortgage market seemed to be in a wait-and-see mode last week as the Federal Reserve signaled a might, maybe, we are thinking about it, approach to a September rate cut. In the interim, most interest rates inched lower. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, increased 0.5 percent on a seasonally adjusted basis from one week earlier and fell 1.0 percent on an unadjusted basis.   The Refinance Index dipped 0.1 percent from the previous week but has now climbed to an  85 percent lead over the same week one year ago. The refinance share of applications increased to 46.6 percent of the total, up from 46.3 percent the prior week. [refiappschart] The seasonally adjusted Purchase Index increased 1.0 percent but was 1.0 percent lower before adjustment. Purchase applications were 9.0 percent lower than the same week one year ago. [purchaseappschart] “Mortgage rates declined for the fourth consecutive week, with the 30-year fixed rate at 6.44 percent, the lowest since April 2023. Rates have now come down more than 80 basis points from a year ago,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Mortgage applications were slightly higher, driven by marginally stronger purchase activity. Refinance applications were essentially unchanged but are still 85 percent higher than last year as borrowers continue to act – particularly FHA and VA borrowers. As observed in recent weeks, despite lower rates, purchase applications have not moved much. Prospective homebuyers are staying patient now that rates are moving lower and for-sale inventory has started to increase.”