Mortgage applications fell for the second straight week, due in part to recent interest rate increases, according to data released Wednesday by the Mortgage Bankers Association.
The composite market index, which tracks loan applications, fell 0.2% on a seasonally adjusted basis for the week ended July 5. On an unadjusted basis, the index plunged 20% for the week from the previous week, following a sharp decline of 2.6% the previous week.
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The refinance index fell 2% from the previous week, but still managed to gain 28% year-over-year. Joel Kan, deputy chief economist at the association, said that was due to the strong rise in home equity values in recent years, but noted that current interest rates leave most borrowers with little incentive to refinance.
In contrast, the seasonally adjusted purchase index rose 1% from the previous week, driven by increases in Federal Housing Administration and Veterans Affairs claims reported by Kann. But without seasonal adjustment, the purchase index plunged 19% on a weekly basis and was down 13% from a year ago.
The average interest rate for a 30-year fixed-rate mortgage with a loan balance of $766,550 or less was 7 percent, down slightly from 7.03 percent the previous week. For larger loan balances, rates increased to 7.13 percent from 7.11 percent. For 15-year loans, rates increased to 6.63 percent from 6.56 percent.
The rate on a 30-year fixed-rate mortgage insured by the FHA fell to 6.87% from 6.9% the previous week. Applications for FHA loans, which are often used by first-time homebuyers and require a small down payment, fell week-over-week to 12.5% from 13.1%.
An increase in home inventory in June and longer stays on the market point to a slight shift toward a buyer's market, according to a report released Tuesday by Realtor.com.