Mortgage Applications Declined Last Week

A For Sale sign displayed in front of a home.

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As mortgage rates ticked up last week, potential homebuyers held off applying for loans and applications declined.

Mortgage applications dropped 5.7% last week, according to data from the Mortgage Bankers Association. Rates on a 30-year fixed mortgage jumped to 6.57%, nine basis points higher than the previous week and the highest level in two months.

Key Takeaways

  • Mortgage applications fell 5.7% for the week ending May 12.
  • Rates increased throughout the week, leading to the drop in mortgage applications.
  • Purchase applications fell 4.8% from the week prior.

The index tracking seasonally-adjusted purchase applications fell 4.8% from the previous week. The unadjusted purchase index was down 26% from one year ago. 

“Purchase applications decreased 5% to its slowest pace in a month, as buyers remain wary of this rate volatility, but also as for-sale inventory in many parts of the country remains scarce,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist, in a statement. 

The MBA’s refinance index also dropped 8% from the week before and was 43% lower than the same week one year ago. The refinance share of mortgage activity dropped to 27.4% of total applications, down from 28% the previous week. 

“Most borrowers have lower rates on their mortgages, and those who are in the market are extremely rate sensitive,” Kan said. 

The Federal Housing Authority's share of applications dropped slightly to 12% from 12.1% the week prior. The Veterans Administration's share of total applications decreased to 12.2% of applications, down from 12.9% the week before. 

The average interest rate for 30-year fixed mortgages with conforming loan balances increased to 6.57% from 6.48% the week before. 

The average interest rate for 30-year fixed mortgages with jumbo loan balances increased to 6.46%, up from 6.33% the week earlier. The average interest rate for 30-year fixed mortgages backed by the FHA decreased to 6.39% from 6.41%. 

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  1. Mortgage Bankers Association, "Mortgage Applications Decrease in Latest MBA Weekly Survey."

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