Mortgage demand weakened last week, according to the latest data from the Mortgage Bankers Association (MBA).
The Market Composite Index, the MBA’s measure of mortgage loan application volume, decreased 2.3% on a seasonally adjusted basis from one week earlier; the unadjusted index was down by 1.4%. The seasonally adjusted Purchase Index dropped by 2% while the unadjusted index dipped 1% — the latter was also 14% lower than the same week one year ago.
The Refinance Index was down by 3% from the previous week and was down 1% lower than the same week one year ago. The refinance share of mortgage activity decreased to 30.2% of total applications from 30.8%.
Among the federal programs, the FHA share of total applications decreased to 12.7% from 12.8% the week prior while the VA share of total applications decreased to 11.3% from 11.7% and the USDA share of total applications remained unchanged at 0.4%.
Mike Fratantoni, MBA’s senior vice president and chief economist, observed, “One notable trend is that the ARM share has reached its highest level for the year at 7.8%. Prospective homebuyers are looking for ways to improve affordability, and switching to an ARM is one means of doing that, with ARM rates in the mid-6% range for loans with an initial fixed period of five years.”
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