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Mortgage Applications Fall to Lowest Level in More Than a Year

Mortgage application | Mortgage Applications Fall to Lowest Level in More Than a Year

Thanks to consistently low mortgage interest rates, demand for mortgages has been elevated for the last 18 months, leading to the mortgage industry having its best quarter since 2000 two quarters in a row. However, that demand took a big step back at the end of June.

According to a new report from the Mortgage Bankers Association, mortgage applications fell to the lowest level in “almost a year and a half” in the week ending June 25, 2021.

Per the report, mortgage applications declined by nearly 7% in that week. According to the MBA, the decline was seen in both purchase applications and refinance applications, with each running at least 15% behind where they were in the same week in 2020.

“Mortgage rates were volatile last week, as investors tried to gauge upcoming moves by the Federal Reserve amidst several divergent signals, including rising inflation, mixed job market data, strong consumer spending, and a supply-constrained housing market that has led to rapid home-price growth," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist.

According to Fratantoni, that drove applications for conventional purchase mortgages to the lowest level since May 2020.

Beyond that, Fratantoni noted that the data likely shows that prospective first-time homebuyers may be having a hard time finding a home to buy.

“The average loan size for total purchase applications increased, indicating that first-time homebuyers, who typically get smaller loans, are likely getting squeezed out of the market due to the lack of entry-level homes for sale,” Fratantoni said.

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