Number of US mortgage applications lowest since mid-July

US mortgage

The MBA said that its seasonally adjusted market composite index tracking mortgage applications dropped 1.9 per cent from a week earlier

The number of applications for home mortgages in the US decreased last week to the lowest level since mid-July, dampened by declines in refinancing activity and purchase applications as mortgage rates remained unchanged.

The Mortgage Bankers Association (MBA) said on Aug 7 that its seasonally adjusted market composite index tracking mortgage applications dropped 1.9 per cent from a week earlier, reflecting a 2.8 per cent decline in applications to refinance existing loans in the week ending Sept 3.

The average contract interest rate for traditional 30-year mortgages was unchanged at 3.03 per cent. Purchase applications fell 0.2 per cent, the MBA said.

Mortgage rates jumped in the first part of this year and peaked in the spring after hitting record lows below 2.9 per cent at the end of last year.

Rates had been drifting lower since, held down in large part by the US Federal Reserve’s extraordinary stimulus measures aimed at helping the economy bounce back from the effects of the coronavirus pandemic.

Refinance volume has been moderating, while purchase volume continues to be lower than expected given the lack of homes on the market, said Mike Fratantoni, MBA’s senior vice-president and chief economist.

He said: Economic data has sent mixed signals, with slower job growth but a further drop in the unemployment rate in August. We expect that further improvements will lead to a tapering of Fed MBS (mortgage-backed securities) purchases by the end of the year, which should put some upward pressure on mortgage rates.

The Mortgage Bankers Association is the US’ national association representing all facets of the real estate finance industry representing more than 2,200 member companies.

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