Mortgage Applications Recover after Five-Week Slide

The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending August 25 and found that, for the first time in five weeks, the number of mortgage applications for home purchases and refinancing went up. However, they were still lower than when they were last year.

The MBA’s Market Composite Index was up at an unadjusted rate of 1%; after being seasonally adjusted, the increase was 2.3%. Compared to the previous week, the Purchase Index was up 0.3% on an unadjusted basis, 2% on a seasonally adjusted basis; however, it was 27% lower compared to the same week last year. The Refinance Index increased 3% but was a drop of 28% year over year.

The share of refinances as part of mortgage activity rose slightly from 29.5% the week ending August 18 to 30.1% the following week. However, the share of adjustable-rate mortgages declined to 7.5% of all applications.

Applications for government-backed mortgages did not fare as well. The share of Fair Housing Administration (FHA) applications fell to 13.2%, compared to 14.3% the week prior. The share of Veterans Administration (VA) applications stayed the same at 11.6% and the U.S. Department of Agriculture (USDA) share of all applications declined slightly from 0.5% to 0.4%.

“Mortgage applications for home purchases and refinances increased for the first time in five weeks but remained at low levels,” said MBA’s Vice President and Deputy Chief Economist Joel Kan. “Purchase applications increased but were still 27 percent lower than a year ago, as elevated mortgage rates and tight housing inventory continue to weigh on home buying activity.”