Is the Mortgage Market Getting Worse?
Despite an improvement earlier in the month, mortgage applications resumed their downward trend as interest rates rose. In the latest update from the Mortgage Bankers Association, for the week ended April 18, applications for home loans fell 3.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index declined 3 percent.
There has been a steady slide in mortgage applications over the past year, as the housing market returns to a more sustainable pace. As the chart above shows, applications are still near their worst level in years. The Refinance Index dropped 4 percent from the previous week, while the Purchase Index declined 3 percent and remains 18 percent below year-ago levels on an unadjusted basis. With surging home prices and demand for higher loan amounts, the average loan size for purchase applications has reached its highest level in the history of the survey at $280,500.
Overall, the refinance share of mortgage activity accounted for 51 percent of total applications, equal to its worst level in five years and down from 52 percent a week earlier. In fact, the refinance share of mortgage activity has now dropped for ten of the past eleven weeks.