Mortgage Rates Drop, But Not Enough to Boost Mortgage Applications

Mortgage application volume, refinancing applications, and mortgage rates took a hit last week compared to the previous week, reports CNBC. Although mortgage rates dropped from 3.17% to 3.15%, the decrease was not enough to bolster mortgage or refinance applications. Total mortgage application volume fell 3.1% for the week, continuing its slow descent, and is 24% lower than this time last year. Refinance applications are 27% lower than last year and fell an additional 5% this week.

“With fewer homeowners able to take advantage of lower rates, the refinance share dipped to the lowest level since April,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Applications for a mortgage to purchase a home were essentially flat from the previous week and 24% lower than a year ago.

“The large annual decline was the result of Memorial Day 2021 being compared to a nonholiday week, as well as the big upswing in applications seen last May once pandemic-induced lockdowns started to lift,” Kan said.

It was also the result of sky-high home prices. Fewer buyers can now afford a home. This was apparent in the average loan size for purchase applications. It fell to $407,000, below the record $418,000 set in February, but still far above 2020′s average of $353,900.

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