Mortgage application activity continued to wither as inquiries for purchase loans evaporated to a level not seen in nearly three decades, according to the latest data from the Mortgage Bankers Association (MBA) tracking the week ending Aug. 18.
The Market Composite Index, the trade group’s measure of mortgage loan application volume, dropped by 4.2% on a seasonally adjusted basis from one week earlier; the index declined by 6% on an unadjusted basis.
The seasonally adjusted Purchase Index was down by 5% and the unadjusted index fell 7% – the latter was also 30% lower than the same week one year ago. The Refinance Index decreased 3% from the previous week and was 35% lower than the same week one year ago – however, the refinance share of mortgage activity increased to 29.5% of total applications from 28.6% in the previous week.
The adjustable-rate mortgage share of activity increased to 7.6% of total applications, its highest level in five months.
Among the federal programs, the FHA share of total applications increased to 14.3% from 13.8% the week prior while the VA share of total applications decreased to 11.6% from 11.8% and the USDA share of total applications increased to 0.5% from 0.4% the week prior.
Joel Kan, MBA’s vice president and deputy chief economist. “Applications for home purchase mortgages dropped to their lowest level since April 1995, as homebuyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power. Low housing supply is also keeping home prices high in many markets, adding to the affordability hurdles buyers are facing.”
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