Demand for mortgage loans in the United States remained largely unchanged last week. However, purchase applications continued to outpace the previous year's rate, as slightly reduced borrowing costs and an improving housing supply encouraged more potential buyers to enter the market.
The Mortgage Bankers Association (MBA) market index, which measures the volume of mortgage applications and includes both applications for home purchases and refinances, rose by only 0.2 per cent on a seasonally adjusted basis in the week ending June 21. On an unadjusted basis, the index decreased by 10 per cent compared to the previous week. Compared to the previous year, this index was 28 per cent higher.
The average contractual rate for a 30-year fixed-rate mortgage with a conforming loan balance and an 80 per cent loan-to-value ratio decreased to 6.94 per cent in the week in question. In the previous week, it had stood at 7.04 per cent. This level is the lowest since the end of March and is attributed to the development of US Treasury yields, which fell after a Federal Reserve interest rate decision in May.
Purchase applications increased by 1.0 per cent week-over-week and were 10 per cent above the level of the previous year. The refinance index, however, decreased by 2.0 per cent, marking its second consecutive weekly decline. Although refinances were 20 per cent above the previous year's level last week, they remain at a historically very low level. This is because the average mortgage rate was significantly below the current 6.94 per cent for most of the last ten years.
The share of refinance activity in total application volume decreased from 35.1 per cent in the previous week to 34.7 per cent. FHA applications accounted for a consistent 13.0 per cent of application volume, while VA applications rose from 13.3 per cent to 13.4 per cent. The share of USDA applications remained constant at 0.4 per cent.
