Purchase applications tick up but remain at a very low level

As mortgage rates reached their 2023 peak, mortgage applications rose slightly but remained very low last week.  

For the week that ended July 7, mortgage applications rose 0.9% from the prior week, according to data from the Mortgage Bankers Association

“Incoming economic data continue to send mixed signals about the economy, with the overall impact leaving Treasury yields higher last week as markets expect that the Federal Reserve will need to hold rates higher for longer to slow inflation. All mortgage rates in our survey followed suit, with the 30-year fixed rate increasing to 7.07%, the highest level since November 2022,” said Joel Kan, MBA’s vice president and deputy chief economist. “The jumbo rate also increased to 7.04%, a record high for the jumbo series, which dates back to 2011.”

Last week, mortgage rates increased dramatically with the 30-year fixed rate increasing to 7.07% from 6.85%, per the MBA’s data. The jumbo rate was higher than the conforming rate for the fifth week in a row. The MBA data showed that for jumbo loan balances (greater than $726,200), the rate jumped to 7.04% from 6.97% last week.   

At Mortgage News Daily, mortgage rates were 2 basis points higher on Wednesday, at 7.09%.

Purchase applications rose, with the purchase index climbing by 2% from one week earlier and was 26% lower than last year’s level on an unadjusted seasonal basis. Refinancing applications decreased 1% last week compared to the previous week and were 39% lower than the same week one year ago. It was the refinance index’s lowest level since early June, as demand for rate/term and cash-out refinances remains extremely low with mortgage rates over 7%, noted Joel Kan.

The refinance share of mortgage activity decreased to 26.8% of total applications from 27.4% the prior week. 

The rise in purchase activity was driven mostly by increases in both FHA and VA purchase applications. The Federal Housing Administration loans’ share increased to 13.3% from 13% the week prior. The U.S. Department of Veteran Affairs loans’ share increased to 12.6% from 11.7% the week prior. And the U.S. Department of Agriculture loans’ share remained unchanged at 0.4% of the total applications.

Adjustable-rate mortgages increased to 6.6% of total loan applications last week. The average contract interest rate for 5/1 ARMs rose to 6.24% from 6.00% a week prior.

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