Despite a pullback of rates, mortgage demand fell for the first time in four weeks according to the Mortgage Bankers Association’s weekly survey…(MBA)
- PURCHASES: The Purchase Index was down 4% for the week and is now down 17% year-over-year, this is down from the 24% year-over-year decline last week.
- REFIS: The Refinance Index was down 8% for the week and is now down 78% from the same time one year, this is down from the 80% year-over-year decline last week.
NOTE: The refinance share of mortgage activity decreased to 29.6% of total applications from 30.3%the previous week. The adjustable-rate mortgage share of activity decreased to 9.5% of total applications.
After a parabolic rise, rates have now fallen for the second week in a row with MBA reporting that the 30-year fixed fell 10 basis points to 5.74% for the week ending July 1st. Rates are now up 254 basis points from one year ago, slightly below the 260 bip difference from last week.
- MBA had the the 15-year fixed at 4.96% (-10 bips) and the 5/1 ARM was down to 4.62% (-2 bips).
Joel Kan, MBA economist, noted that rates have fallen but affordability issues are still putting downward pressure on demand. “Mortgage rates have increased sharply thus far in 2022 but have fallen 24 basis points over the past two weeks, with the 30-year fixed rate at 5.74 percent…Rates are still significantly higher than they were a year ago, which is why applications for home purchases and refinances remain depressed. Purchase activity is hamstrung by ongoing affordability challenges and low inventory, and homeowners still have reduced incentive to apply for a refinance.”
Interestingly, the first negative week in about a month coincided with a drop in rates and a year-over-year increase in demand compared to the prior week. Remember, the whole purpose of rising rates is to cool demand to let inventory catch up while prices cool, if not, somewhat retract slightly. We look to be right on track.
EXIT QUESTION: What happened to the great adjustable-rate panic of 2022?