Mortgage application volume slumps to one-month low

Application activity slows as higher interest rates bites

Mortgage application volume slumps to one-month low

Mortgage applications fell to their lowest level in a month as interest rates for most loan types rise, the Mortgage Bankers Association reported today.

MBA’s Market Composite Index – a measure of loan application volume – ticked down 4.4% on a seasonally adjusted basis and down 6% when unadjusted. Demand weakened as the average contract interest rate for a 30-year mortgage increased 10 basis points for the week ending June 30.

“As mortgage Treasury spreads remained wide, the 30-year fixed rate increased to 6.85%, the highest rate since the end of May,” MBA deputy chief economist Joel Kan said.

Kan also noted that purchase applications decreased for the first time in a month, down 5% week over week. Refinance application volume declined by 4% from the previous week.

“Rates are still over a percentage point higher than a year ago, and housing affordability is still a challenge in many parts of the country,” Kan added. “However, the average loan size for a purchase application declined to $423,500 – its lowest level since January 2023. This was likely driven by reduced purchase activity in some high-price markets and more activity in some of the lower price tiers as buyers searched for more affordable options.”

In a separate report, MBA found that homebuyer affordability worsened in May. The median loan payment applied for by purchase loan applicants was up to $2,165, a 2.5% month-over-month increase and a 14.1% spike from May 2022.

For borrowers applying for lower-payment mortgages, the national mortgage payment climbed to $1,462 in May.

Want to keep up with the latest mortgage news? Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.