Mortgage demand fell for a third consecutive week last week as the 30-year mortgage rate remained over 7%, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
For the week ending February 23, total mortgage demand decreased 5.6% compared to the prior week, the survey showed.
The 30-year fixed mortgage rate was 7.04%, down from 7.06% in the prior week.
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"Mortgage demand continues its downward trajectory as rates have stayed above 7% for the past couple of weeks,” Rodrigo Sermeño, housing editor at The Kiplinger Letter said in a statement. “A stronger than expected inflation reading has lowered the chances of a near-term rate cut by the Federal Reserve.”
Mortgage rates will likely stay around 7% and mortgage applications will likely trend lower over the next few weeks, Sermeño said.
“Mortgage rates were little changed last week,” Mike Fratantoni, MBA senior vice president and chief economist, said in a statement. “Higher rates in recent weeks have stalled activity, and last week it dropped more for those seeking FHA and VA refinances.”
Fratantoni said that purchase activity is running 12% behind last year’s pace but that MBA’s January Builder Application Survey shows that applications to buy new homes rose 19% from last year. “This disparity continues to highlight how the lack of existing inventory is the primary constraint to increases in purchase volume. However, mortgage rates above 7 percent sure don’t help,” he added.
A February 22 National Association of Realtors (NAR) report shows that existing-home sales expanded 3.1% in January compared to the prior month, but slipped 1.7% from the prior year.
“While home sales remain sizably lower than a couple of years ago, January's monthly gain is the start of more supply and demand," NAR Chief Economist Lawrence Yun said in a statement. "Listings were modestly higher, and home buyers are taking advantage of lower mortgage rates compared to late last year."
The median existing-home price for all housing types was $379,100 in January, a 5.1% increase from the prior year, NAR said.
"The median home price reached an all-time high for the month of January," Yun said. "Multiple offers are common on mid-priced homes, and many homes were still sold within a month. The elevated share of cash deals – 32% – indicated a market full of multiple offers and propelled by record-high housing wealth."
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Mortgage application highlights
The Market Composite Index, which measures mortgage loan application volume, decreased 5.6% on a seasonally adjusted basis from the prior week, and decreased 3% on an unadjusted basis, MBA said.
The Purchase Index decreased 5% on a seasonally adjusted basis, compared to the prior week. On an unadjusted basis, the index decreased 1% from the prior week and fell 12% from the same week a year ago.
The Refinance Index, which measures refinancing and prepayment activity, decreased 7% from the prior week and was 1% lower than the same week a year ago. The refinance share of mortgage activity decreased to 31.2% of total applications from 32.6% the previous week.
The FHA share of total applications decreased to 13% from 13.2% the prior week. The VA share decreased to 11.7%, from 12.1% in the week prior, and the USDA share remained unchanged at 0.5% from the prior week.
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