Mortgage activity falls as affordability concerns take a toll

Abstract

Mortgage volumes decreased for both purchases and refinances last week despite falling interest rates, as lenders face an ongoing decline in demand driven by affordability concerns. The Refinance Index dropped 8% week over week with volumes 78% below their level from one year ago. The share of adjustable-rate mortgages measured by the MBA decreased to 9.5% of volume after making up 10.1% of volume the prior week. Department of Veterans Affairs-sponsored loans made up 11.1% of the total pool of applications, down from 11.2%, while the share of mortgages coming through the U.S. Department of Agriculture remained unchanged at 0.6% week over week. "Mortgage rates decreased for the second week in a row, as growing concerns over an economic slowdown and increased recessionary risks kept Treasury yields lower," Kan said. The 15-year fixed-rate mortgage average declined 10 basis points to fall back below 5%, averaging 4.96% compared to 5.06% a week earlier. The contract interest rate for 5/1 adjustable-rate mortgages edged down by 2 basis points to an average of 4.62% after coming in at 4.64% the prior week.