The level of mortgage application activity evaporated last week, according to new data from the Mortgage Bankers Association (MBA).
“Mortgage applications declined to the lowest level since December 1996, despite a drop in mortgage rates,” said Joel Kan, MBA’s vice president and deputy chief economist. “Both purchase and refinance applications fell, with the purchase index hitting a 28-year low, as prospective buyers remain on the sidelines due to low housing inventory and elevated mortgage rates.”
The Market Composite Index, the trade group’s measure of mortgage loan application volume, dropped by 2.9% on a seasonally adjusted basis from one week earlier and sank 5% on an unadjusted basis.
The seasonally adjusted Purchase Index was 2% lower week-over-week and the unadjusted index was down by 5% – the latter was also 28% below the level from the same week one year ago.
The Refinance Index recorded a 5% drop from the previous week and was 30% below the level from the same week one year ago. The refinance share of mortgage activity dipped to 30.0% from 30.1 percent the previous week.
Among the federal programs, the FHA share of total applications increased to 13.7% from 13.2% the week prior while the VA share of total applications decreased to 11.3% from 11.6% and the USDA share of total applications increased to 0.6% from 0.4% the week prior.
“The 30-year fixed mortgage rate decreased to 7.21% last week, but rates remained more than a full percentage point higher than a year ago, despite mixed data on the health of the economy and signs of a cooling job market,” Kan added. “The refinance index dropped to its lowest level since January 2023, driven by a 6% decline in conventional refinances.”