Mortgage Apps: Activity Slowing Again Even Amid Low Rates

Bottom Line: Mortgage applications have slowed since early August, even as 30-year mortgage rates stayed below 4% on average. The 4-week moving average of the purchase index is 6% below the 13-week average, suggesting a potential turn in trend. That is concerning. The increase in purchase applications early this year foretold the stabilization and modest upturn in home sales seen in the last 6 months -- but the trend in purchases applications in the last four months is now mixed to slightly lower. The refinancing index has been the main driver of applications since mortgage rates fell below 4.25% in the first week of June. Refinancing activity is still strong, suggesting consumers are benefiting from lower rates, but that trend bears watching too as the last few weeks have seen activity cool a bit. The MBA Mortgage Applications Index FELL by 6.2% during the week ended August 23 to 576.2, sharply above its 13 week average of 522.9 and 67.5% ABOVE its year ago level. The Purchase Index FELL by 4.0% to 234.1, moderately below its 13 week average of 259.1 but 1.7% ABOVE its year ago level. The Refinance Index FELL by 7.6% to 2,546. With this decline, refinancing activity is sharply above its 13 week average of 2,024 and 167.1% ABOVE its year ago level. Contract Mortgage Rates ROSE with the 30-year fixed rate increasing by 4 bps to 3.94% and with the 15-year fixed rate increasing by 1 bp to 3.31%.