Over the last month, the Mortgage Bankers Association’s (MBA) tracked 30-year fixed-rate mortgage rate was showing a greater constancy than the volatility it had displayed in the prior months, staying between 3.10 percent and 3.20 percent, and dropped in the latest week, falling to 3.09 percent.
Similarly, the MBA’s Market Composite Index sharply rebounded last week by 16 percent from lower activity levels for most of the month. The rebound, as the MBA cites, may have been partly aided by a delayed spillover of applications from the previous week due to the July 4th holiday. Most of the increase is attributable to the surge in refinancing, which increased by 20.4 percent on a seasonally-adjusted basis. Purchasing, on the other hand, increased relatively little, by 8.3 percent1.
The 10-year-Treasury yield trended lower over the last month possibly over concerns about the new, COVID-19 variants.
Meanwhile, housing inventory shortages (particularly, for-sale inventory) continue to constrain the supply side of the market.
The lost momentum of a hot market is evident from looking at the year-over-year percent changes in mortgage purchasing and refinancing, which have both been in negative territory for the last six weeks. On an unadjusted basis, both categories showed year-over-year declines of approximately 29 percent in the latest week.
The refinance share of mortgage activity increased to 64.1 percent of total applications from 61.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.5 percent of total applications.
- While the weekly percentage increases of purchasing and refinancing appear to be very close together, the much higher numerical levels of the Refinancing Index than the Purchasing Index (not given in this analysis, but seen in the MBA’s survey data) seem to signify that it plays a much larger role in the Composite Index.