Mortgage loans are slowing for the first time in four weeks

Applications for new home loans are increasing an early summer breakAccording to the Mortgage Bankers Association, interest rates are falling for the first time in a month.

The MBA’s Market Composite Index, a measure of weekly filing volume based on surveys of the trade group’s members, fell a seasonally adjusted 2.6% for the period ended June 28. after two weeks of smoothing activity, with the index still managing to squeeze out incremental gains. Volumes ended lower for the first time in four weeks, but compared to the same seven-day period last year, activity remained unchanged.

Weekly loan guidance declined as interest rates among MBA lenders moved back up.

The average conforming fixed rate for the 30-year mortgage rose 10 basis points higher to 7.03%, compared to 6.93% seven days earlier. The number of points used to reduce the interest rate increased from 0.61 to 0.62 for applications with an 80% loan-to-value ratio in this category. (Loans with conforming balances are eligible for sale to government-sponsored enterprises.)

The average mortgage rate among MBA lenders was higher for all loan types tracked by the association.

The latest increase in interest rates occurred despite news of moderating inflation that would apparently encourage a cut in central bank interest rates later this year, said Mike Fratantoni, senior vice president and chief economist at the MBA.

Mortgage activity slowed in virtually all home loan categories, he said. The seasonally adjusted purchasing index fell 3.3% and, like the broader market, fell for the first time in four weeks. The number of applications fell 12% below the level of a year ago.

“Purchases declined in the last full week of June, while both new and existing inventories have increased in recent months,” Fratantoni said in a press release. While supply increases and price growth slowsthe housing market barriers to affordability remain for some consumers, leading to sluggish recent purchasing interest, several researchers say.

“Refinancing activity also remains subdued – although there was a slight increase in applications for conventional refinancing loans,” Fratantoni added.

The Refinance Index fell by 1.5% week on week. But compared to a year ago, refinancing volumes increased by 29.1%. Homeowners seem to be adapting to the current situation on the housing market, but at the same time remain sensitive to fluctuations this year as they look for options, including refinancing, to cut costs, ICE Mortgage Technology reported this week.

A larger decline in purchase loans allowed the share of refinancings to total volume to grow from 35.1% a week earlier in the MBA survey to 35.7%.

Federally backed lending slowed for both purchases and refinancings, with the MBA Government Index down 5.7% week over week on a seasonally adjusted basis. The share of VA loans also shrank during the seven-day period

Department of Veterans Affairs guaranteed applications generated 12.9% of the week’s total volume, compared to 13.8% in the previous survey. Meanwhile, the share of loans insured by the Federal Housing Administration remained the same at 13.1%. U.S. Department of Agriculture-backed applications accounted for 0.3% of activity, up from 0.4% seven days earlier.

The average interest rate for the 30-year FHA-insured home loan increased 8 basis points from 6.82% to 6.9%. Points dropped from 0.99 to 0.95.

The interest rate on a fixed contract with a term of 15 years also rose by 10 basis points to 6.56%, compared to 6.46% in the previous survey. The number of credit points used fell from 0.75 a week earlier to 0.54.

The 5/1 adjustable rate mortgage averaged 6.38%, up from 6.29% seven days earlier. The number of points used to buy down the interest on the loan, which starts with a fixed term of 60 months, has increased from 0.5 to 0.54.

The 30-year fixed contract jumbo average for loans with balances above the conforming level rose from 7.04% to 7.11%. Borrowers typically used 0.5 points, compared to 0.6, for loans with an 80% LTV ratio.

Overall, all types of variable rate mortgages accounted for 6% of weekly volume, up from 6.1% in the previous survey.