According to the Mortgage Bankers Association's seasonally adjusted report, total mortgage application volume was down 5.8 percent last week over the previous week, and fell 17 percent annually.
Applications to purchase a home led the decline, dropping 7 percent week-over-week, though up 2 percent annually. Despite the recent drop in mortgage rates, buyers are still facing unaffordable market conditions, compounded by the recent stock market volatility. Home refinance applications decreased 2 percent weekly, 33 percent annually; the average balance for these loans hit a 15-month high. Joel Kan, MBA's associate vice president of economic and industry forecasting tells CNBC, "With rates continuing to slide lower, refinance borrowers with larger loan balances seemed more apt to take action."
The refinance share of mortgage activity increased to 43.5 percent of total applications, its highest level since February, from 41.5 percent the previous week. Mortgage rates slid further to start this week, but all eyes are now on the Federal Reserve, which will make its next rate announcement Wednesday afternoon.
"We could see plenty of volatility for rates," said Matthew Graham, chief operating officer at Mortgage News Daily. "A strong move in one direction or the other could even set the tone for the next two weeks."