The state of the housing market, where there aren’t many homes to buy and the ones that do hit the market keep getting more expensive, appears to be continuing to slow down the demand for mortgages.
According to a new report from the Mortgage Bankers Association, mortgage applications fell for the second week in a row, falling to the lowest level since the beginning of 2020.
While the decline wasn’t as pronounced as it was in the previous week, mortgage applications fell by 1.8% in the week ending July 2, 2021.
According to Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting, the decline was seen in both purchase and refinance applications.
“Even as mortgage rates declined, with the 30-year fixed rate dropping 5 basis points to 3.15%, both purchase and refinance applications decreased," Kan said.
"Treasury yields have been volatile despite mostly positive economic news, including last week's June jobs report, which showed ongoing improvements in the labor market. However, rates continued to move lower - especially late in the week,” Kan continued. “The 30-year fixed rate was 11 basis points lower than the same week a year ago, but many borrowers previously refinanced at even lower rates.”
To that point, Kan said that refinance applications are trending behind last year’s elevated levels, having fallen below 2020 levels in each of the last four months.
Beyond that, the rate at which prices are rising is impacting the homebuying market.
"Swift home-price growth across much of the country, driven by insufficient housing supply, is weighing on the purchase market and is pushing average loan amounts higher,” Kan said.