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Demand for riskier mortgages drops, as their advantages shrink
Overall mortgage demand essentially flattened last week, as interest rates continue to hover in a narrow range. Borrowers are also pulling back from riskier loans, as they are offering smaller advantages.
Total mortgage application volume increased 0.04% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, decreased to 6.57% from 6.59%, with points increasing to 0.65 from 0.63, including the origination fee, for loans with a 20% down payment.
The average rate for a five-year ARM, or adjustable-rate mortgage, increased to 5.79% from 5.68%. ARMs are considered riskier because they reset to the market rate after the fixed term. They do generally offer lower rates, but the spread between ARMs and the 30-year fixed is shrinking. ARM loans accounted for just 7.6% of all applications last week, the lowest share since January and down from a high of 9.6% in mid-May.
Mortgage Applications Increase In Latest MBA Weekly Survey
WASHINGTONâ Mortgage applications increased 0.04% from one week earlier, according to data from the Mortgage Bankers Associationâs (MBA) Weekly Mortgage Applications Survey for the week ending June 26.
Last weekâs results included an adjustment for the Juneteenth holiday.
The Market Composite Index, a measure of mortgage loan application volume, increased 0.04% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 11% compared with the previous week. The Refinance Index decreased 1% from the previous week and was 9% higher than the same week one year ago. The seasonally adjusted Purchase Index increased 1% from one week earlier. The unadjusted Purchase Index increased 11% compared with the previous week and was 3% higher than the same week one year ago.
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Purchase demand grows as ARM loans hit lowest share since January
Oil-driven rate dip lifts purchase applications while ARM demand retreats to a six-month low
Mortgage application volume held essentially flat in the week ending June 26, inching up just 0.04% on a seasonally adjusted basis, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
However, the details beneath that near-standstill offer a more nuanced picture for originators heading into the second half of the year.
A modest decline in oil prices eased mortgage rates slightly, nudging the 30-year fixed conforming rate down two basis points to 6.57%. That was enough to lift purchase applications 1% for the week on a seasonally adjusted basis, while refinance activity edged down 1%, leaving the refinance share of total applications at 41.4%.
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