Competing forces pulled rates in opposite directions last week, leaving buyers and refinancers cautious
Mortgage application volume in the United States fell 3.8% in the week ending June 12, as a surge in inflation data early in the week offset modest optimism tied to potential progress in the Middle East, according to the Mortgage Bankers Association's (MBA) seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($832,750 or less) held unchanged at 6.60%, with points steady at 0.63, including the origination fee, for loans with a 20% down payment.
Prior week's MBA data showed the 30-year conforming rate had recently touched 6.57%, its lowest point in weeks before ticking back up.
"Last week's CPI data showed that inflation continued to move higher, putting upward pressure on rates early in the week, but growing optimism regarding the opening of the Strait of Hormuz brought rates down again by the end of the week," said Mike Fratantoni, senior vice president and chief economist at the MBA in Washington, D.C.
Applications to refinance fell 5% for the week, though they remained 17% above the same period a year ago when rates were nearly a quarter of a percentage point higher.
The refinance share of total applications edged up slightly to 40.3% from 40.2%.
Fratantoni noted that "purchase applications continue to run modestly ahead of last year, with last week's volume up 3% on an annual basis, with stronger growth in conventional purchase volume while government purchase volume remained subdued."
Purchase applications declined 3% for the week, registering just 3% above year-ago levels, a narrowing cushion compared with double-digit annual gains seen earlier in the spring.
That trend lines up with what originators are reporting on the ground. Jaime Rhude, a loan officer with CrossCountry Mortgage in Florida, told Mortgage Professional America in a recent interview that rates are shifting borrower conversations: "Rates are making an impact. Applications slowed down for a couple of weeks."
That caution is echoed at the forecast level. Odeta Kushi, an economist who spoke recently with MPA ahead of the Fed's June meeting, offered a measured outlook: "The more likely story for the second half of the year is volatility around a higher-for-longer range, rather than a meaningful decline in mortgage rates."
The ARM share of total applications dipped to 8.5%, while jumbo 30-year rates fell to 6.62% from 6.66%. FHA 30-year rates edged down to 6.25% from 6.27%, and the 15-year fixed ticked up to 6.02% from 5.99%.
Wednesday marks the first Fed meeting chaired by Kevin Warsh. No rate change is expected, but market participants will be closely watching his remarks for any forward guidance.
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