Finance

Mortgage applications fall for second straight week

A for-sale sign is seen outside a home in this undated file photo.(Getty Images)

Mortgage applications sank for the second consecutive week even as rates dipped slightly amid fears of a looming recession.

Total mortgage demand fell 5.4 percent from the previous week, according to data from the Mortgage Bankers Association that covered applications for the week ending July 1. The dip in demand came as mortgage rates fell by 24 basis points over the previous two weeks.

The numbers indicate that prospective buyers aren’t swayed by modest mortgage rate reductions. The average interest rate for a 30-year fixed-rate mortgage with conforming loan balances stands at 5.74 percent, down 10 basis points from the previous week but up from around 3.3 percent at the start of the year.  

“Rates are still significantly higher than they were a year ago, which is why applications for home purchases and refinances remain depressed,” Joel Kan, the mortgage group’s associate vice president of economic and industry forecasting, said in a statement. “Purchase activity is hamstrung by ongoing affordability challenges and low inventory, and homeowners still have reduced incentive to apply for a refinance.”

Refinance applications were down nearly 8 percent from the previous week and 76 percent lower than the same period last year, according to the Mortgage Bankers Association survey. It also found that home purchase applications fell by 4 percent. 

Home sales are slowing as many first-time home buyers find themselves priced out of the market. Limited inventory is keeping home prices at record levels, coupled with sky-high mortgage rates that drive up the total cost. 

The Federal Reserve’s move to hike interest rates in its battle against red-hot inflation caused mortgage rates to spike, though they have fallen slightly from their peak last month. Home builders have warned that higher interest rates will also reduce new home construction, further limiting the supply of houses for sale.  

Buyers could see some relief in the near-term, however, as weaker demand for homes temporarily boosts housing supply. A recent report from Realtor.com found that active listings increased 18.7 percent year-over-year in June.

Tags demand home buyers Housing housing market Interest rates mortgage rates

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