Mortgage Applications Hit Lowest Point Since February 2023

Mortgage applications hit lowest levels since February 2023, following a 0.8% decline last week. This decline marked the fourth consecutive week of decreases, influenced by a significant rise in the 30-year fixed-rate mortgage, which soared to 7.16%, its highest point since 2001. The Mortgage Bankers Association reported a 0.8% drop in mortgage applications for the week ending August 11, compared to the preceding week.

The elevated treasury yields and mortgage rates from the previous week persisted, fueled by the robust CPI report from July. This has raised concerns among investors about a potential rate hike in the upcoming Federal Reserve meeting. Joel Kan, the MBA’s deputy chief economist and vice president, noted, “The surge in rates led to an overall decline in applications, with both purchase and refinance applications hitting their lowest since February 2023.”

Contrarily, there was a 2.4% uptick in government purchase applications over the week, propelled by increases in both FHA and VA purchase categories. Additionally, the ARM share of applications marginally increased to 7%, the highest since April 2023. Kan explained that this rise in ARM applications is a result of borrowers seeking respite from the escalating fixed rates.

Simultaneously, the refinance index experienced a 2% reduction from the previous week, a staggering 35% decrease compared to the same week in the previous year. The unadjusted purchase index also declined by 2% week-over-week and was 26% lower than the same week a year ago.

On Tuesday, Mortgage News Daily reported a 30-year fixed-rate mortgage rate of 7.26%, while HousingWire’s Mortgage Rates Center indicated that Optimal Blue had rates of 7.16%.

The share of Federal Housing Administration loans rose slightly from 13.6% to 13.8% over the week, whereas the shares of the U.S. Department of Veteran Affairs and the U.S. Department of Agriculture loans remained steady at 11.8% and 0.4%, respectively.

Lastly, the average contract interest rate for 5/1 ARMs decreased from 6.36% to 6.20% compared to the previous week.