Mortgage applications have fallen for a second consecutive week as homebuyers’ fears of a potential recession continue to grow.
For the week ending July 1, the Mortgage Bankers Association reported a 5.4% decrease in mortgage applications from the previous week. The results include a holiday adjustment to account for early closings the Friday before Independence Day.
Refinance applications fell 8% from the previous week and were 78% lower than the same week one year ago. The refinance share of mortgage activity decreased to 29.6% of total applications from 30.3% the previous week. Home purchase applications fell by 4% for the week and are 17% lower than the same week a year ago.
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Though the Federal Reserve’s efforts to tame scorching-hot inflation have driven mortgage rates higher, they recently have started to ease, falling 24 basis points over the past two weeks.
However, MBA associate vice president of economic and industry forecasting Joel Kan says the slight dip in rates is not enough to change prospective homebuyers’ minds.
“Rates are still significantly higher than they were a year ago, which is why applications for home purchases and refinances remain depressed,” Kan said in a statement. “Purchase activity is hamstrung by ongoing affordability challenges and low inventory, and homeowners still have reduced incentive to apply for a refinance.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.74% from 5.84%. The average home purchase loan size for the week ending July 1 was $405,200, down from $413,500 for the week ending June 24, but 21% higher than the same week one year ago.
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The latest data comes as Realtor.com recently reported an 18.7% year-over-year increase in active listings in June. However, the total inventory of active listings for the month was down 34.1% compared to 2020 and 53.2% compared to 2019.
According to Realtor.com, the June national median listing price for active listings was $450,000, up 16.9% compared to last year and up 31.4% compared to June 2020. In large metro areas, median listing prices grew by an average of 13.3% compared to last year.
Nationally, the typical home spent 32 days on the market in June, down four days from the same time last year and down 37 days from June 2020.