Mortgage Apps Decline as Refinance Hype Wanes

Overall mortgage application activity continued to slip in the week ending June 5, falling 7.2% from the week before, according to a survey released today by the Mortgage Bankers Association. Total application activity is still up 7.6% from the year-ago levels. Interest in refinance loans fell again this week, with the refinance application index falling 11.8% from the week before. Applications for refinance accounted for 59.4% of total apps this week, down from 62.4% last week and from 69.3% a week before. The reason for this slide in refinance popularity might be seen in increasing mortgage rates. Long-term fixed mortgage interest rates  tracked by the MBA also rose this week, reflecting a reversal from recent historic lows. The MBA found 30-year fixed rates increased to 5.57% from 5.25% while 15-year fixed rates rose to 5.1% from 4.8%. A separate survey conducted by Mortgage Maxx adjusts raw application activity to neutralize the inflationary effect multiple applications from a single borrower has on total volume. The Mortgage Application Index — or MAX — found overall activity (in terms of the number of borrowers applying instead of the number of applications) slipped 3.9% in the week ending June 5. Activity in California alone fell 1.6% the same week. The declines, according to MAX publisher Paul Descloux, might have something to do with increasing interest rates and the exodus of prospective refinancers from the application process. “As mortgage benchmarks continue to wilt against anticipated supply, substantially higher consumer rates have pressured the MAX the past two weeks,” he writes. “Are the green shoots already shot?” Descloux doesn’t offer an answer. Pointing toward higher mortgage rates and a difficult refinance market where underwriting standards are tight and prospective refinancers appear to be retreating, Descloux indicates the MAX may have already passed its high mark for the year. Write to Diana Golobay.