As the Federal Open Markets Committee raised interest rates by 25 basis points last Thursday, mortgage rates ticked up and mortgage applications fell. For the week that ended July 28, mortgage applications fell 3% from the prior week, according to data from the Mortgage Bankers Association.
“Mortgage rates edged higher last week, with the 30-year fixed mortgage rate’s increase to 6.93% and leading to another decline in overall applications,” said Joel Kan, MBA’s vice president and deputy chief economist.
The purchase index kept decreasing for the third straight week, hitting its lowest level since the beginning of June. Meanwhile, it remains 26% behind last year’s levels. The decline in purchase activity was driven mainly by weaker conventional purchase application volume, said Kan.
He added : “The limited housing inventory and rates still close to 7% are crimping affordability for many potential homebuyers.”
On the other hand, the refinance market continues to suffer from these higher rates with many homeowners not looking for refinance opportunities. The refinance index decreased 3% since last week and is 32% lower than it was the same week a year ago.
At Mortgage News Daily, 30-year fixed-rate mortgage rates were at 7.10% on Tuesday. At HousingWire’s Mortgage Rates Center, Optimal Blue had rates at 6.88% on Monday.
The Federal Housing Administration loans’ share increased to 13.3% from 12.7% the week prior. The U.S. Department of Veteran Affairs loans’ share dropped to 11.6% from 12.1%. And the U.S. Department of Agriculture loans’ share ticked up to 0.7% from 0.5%.
Adjustable-rate mortgages increased to 6.5% of total loan applications last week, the MBA said. The average contract interest rate for 5/1 ARMs climbed to 6.18% from 6.01% a week prior.
