Mortgage applications were up slightly last week as mortgage rates dipped. However, the refinancing market looks weak, as the rates may have reached a tipping point in which the value of refinancing is too low to be worth the trouble. For more on this see the following article from HousingWire.
Weekly mortgage loan application volume rose 6.6% in the week ending June 19 and is 17.2% above the volume seen at the same time last year, according to a survey released today by the Mortgage Bankers Association.
Applications for refinance rose 5.9%, but the refi share of total application activity still fell slightly to 54% this week from 54.1% a week earlier. The four-week moving average for all applications is down 9.3%, while the four-week moving average for purchase mortgages gained 2.2% and the four-week refi average slipped 15.5%.
The MBA, which also studies mortgage rates, found that both 15- and 30-year fixed-rate mortgages (FRMs) saw another decrease in average rates this week. The 30-year FRM averaged 5.44% from 5.5% last week, while the 15-year FRM averaged 4.93% from 4.99%.
The lower rates might account for the influx of application activity this week, which appears to contradict another survey on lower household activity in the application market.
A separate mortgage application survey conducted by Mortgage Maxx adjusts total application data to reflect only household activity. The Mortgage Application Index — or MAX — counts multiple applications from a single household as one participant and as a result reflects the number of households seeking a mortgage or refinance, rather than simply the total number of applications submitted.
While the MBA saw total applications rise 6.6% this week, the MAX fell 9.1%, indicating the number of households seeking loans contracted significantly despite a higher overall number of applications. Or, in other words, 9% fewer households submitted almost 7% more applications than last week.
The MAX specific to the California market saw household activity fall 10.6%.
The MAX publisher Paul Descloux, in his weekly commentary on the index, attributed the declines to a drying out of the refinance wave as mortgage rates moved higher — despite the Federal Reserve’s efforts to keep rates low — and the refinance process became too costly with fees and points to do many borrowers any good.
Usually “mortgage rates below five% would have propelled the MAX…[but] this time, the efficacy of the Fed’s rate tonic has been severely diluted with fractional results,” Descloux writes. “Now with the bond vigilantes coming to the fore as trillions in US debt begs to be financed, quantitative easing takes a beating and hard pressed homeowners are back where they started last year.”
This article has been reposted from HousingWire. View the article on HousingWire’s mortgage finance news website here.