Are Homebuyers Returning to the Mortgage Market Yet?
The mortgage market is finding some stabilization with interest rates, but overall lending activity is still weak. According to the Mortgage Bankers Association’s latest update, for the week ended July 11, applications for home loans fell 3.6 percent on a seasonally adjusted basis from one week earlier.
The Refinance Index, which declined more than 13 percent over the past month, dipped another 0.1 percent from the prior week. Furthermore, the seasonally adjusted Purchase Index decreased 8 percent from one week earlier to the lowest level since February 2014. The unadjusted Purchase Index surged 16 percent compared to the previous week, but was still 17 percent below the same week a year earlier. As the chart above shows, applications have struggled to gain momentum for a sustained period since the housing bubble collapsed.
Overall, the refinance share of mortgage activity accounted for 54 percent of total applications, up from 52 percent a week earlier. It has been a rare occurrence to see the refinance share of mortgage activity gain ground. Refinancing has dropped for 14 of the past 23 weeks.