Mortgage application volume wasn’t as stellar as it was last week as rates climbed slightly, but it was still up across the board on an annual basis.
Total mortgage applications were down 3.4% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. But volume was up 31.6% from the same week a year ago.
Total refinance application volume was down 4%, but up 79.5% from the same week a year ago, which is the highest level since January 2018, and the second highest level this year.
Mortgage rates had seen six weeks of declines before inching up slightly last week, which shows how rate-sensitive refinances are.
“After seeing a six-week streak, mortgage rates for 30-year loans increased slightly, which led to a pullback in overall refinance activity,” said MBA economist Joel Kan.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.14% from 4.12%, with points increasing to 0.38 from 0.33 (including the origination fee) for 80% loan-to-value ratio loans. The effective rate increased from last week.
Applications to purchase a home were down 4% since last week, but they were also 4% higher than a year ago.
“Strong demand from first-time buyers and low unemployment continue to push this year’s purchase activity above a year ago,” Kan said.
Although there is strong demand, first-time buyers continue to face low inventory. This week’s census data on new residential construction didn’t improve the outlook, as single-family housing starts in May fell 6.4%. Building permits were up in May, but only by 0.3%.
“The current trend in permits suggests that the same pace of construction is likely to continue, without either acceleration or declines. Builders remain constrained by a lack of skilled labor, shown by the still-record level of job openings in the construction sector,” said MBA economist Mike Fratantoni.