Real Estate

Mortgage applications slump as demand for refinancing wanes

Demand for mortgages slipped last week as requests to refinance slowed, outweighing the impact of a slight increase in purchase loan applications.

For the week ending June 4, the Mortgage Bankers Association’s Weekly Mortgage Applications Survey showed requests for all types of mortgages falling by a seasonally adjusted 3.1 percent from the week before, and dropping 27 percent from a year ago.

Requests for purchase loans were up a seasonally adjusted 0.3 percent from the week before, but down 24 percent from the same time a year ago. Applications to refinance were down 5 percent week-over-week, and 27 percent lower than the same week one year ago.

Joel Kan

“Purchase applications were up slightly last week, and the large annual decline was the result of Memorial Day 2021 being compared to a non-holiday week, as well as the big upswing in applications seen last May once pandemic-induced lockdowns started to lift,” said the MBA’s Joel Kan.

Although mortgage rates did come down a bit last week, most of the decline came late in the week, said the MBA’s Joel Kan. “With fewer homeowners able to take advantage of lower rates, the refinance share dipped to the lowest level since April,” Kan said.

Requests to refinance accounted for 60.4 percent of total applications, down from 61.3 percent the week before. Only 3.9 percent of applications were for adjustable-rate mortgage (ARM) loans, up from 3.7 percent the week before.

The Mortgage Bankers Association reported average rates for the following loan types during the week ending June 4, 2021:

  • For 30-year fixed-rate conforming mortgages (with balances of $548,250 or less), rates averaged 3.15 percent, down from 3.17 percent the week before. The effective rate also fell, with points decreasing to 0.34 from 0.39 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
  • Average rates for 30-year fixed-rate jumbo loans (with balances greater than $548,250) decreased to 3.29 percent from 3.34 percent, with points decreasing to 0.32 from 0.38 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • For 30-year fixed-rate mortgages backed by the FHA, rates decreased to 3.12 percent from 3.16 percent, with points increasing to 0.34 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • Average rates for 15-year fixed-rate mortgages decreased to 2.52 percent from 2.56 percent, with points decreasing to 0.29 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
  • Average rates for 5/1 ARMs remained unchanged at 2.54 percent, with points increasing to 0.30 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

Although mortgage rates have retreated from a surge seen in February and March, home sales have been dented by listing shortages and record home price appreciation.

According to a recent Fannie Mae survey, more than half (56 percent) of consumers think it’s a bad time to buy a home. Despite that, a record-high 72 percent of consumers said they’d prefer buy a home rather than rent if they were going to move.

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