The US mortgage market faced a setback as mortgage applications for home purchases experienced a fourth consecutive weekly decline. Despite a slight dip in mortgage rates, the subdued demand is a result of soaring rates, which continue to discourage potential homebuyers.
The mortgage industry in the United States witnessed a decline in home purchase applications for the fourth week in a row, as 30-year fixed mortgage rates maintained their almost seven-month high. The Mortgage Bankers Association‘s index measuring applications for home purchases dropped by 1.7% in the week ending June 2, reaching a level not seen since 1995. Meanwhile, the contract rate on a 30-year fixed mortgage decreased by 10 basis points to 6.81%, as reported by MBA.
The surge in mortgage rates over recent weeks has provided little incentive for potential homebuyers to apply for new mortgages. While there was a slight retreat in borrowing costs, rates remain elevated, which not only hampers housing affordability but also discourages homeowners from listing their properties for sale. This stagnation in the housing market could have broader economic implications.
The data covering the period including the Memorial Day holiday, which is known to affect market activity, could have influenced the downward trend in mortgage applications. The holiday may have led to fewer people actively engaging in the real estate market during that period.
In addition to the decline in applications for home purchases, refinancing activity also experienced a slight dip, according to the MBA report. Overall, the composite index measuring mortgage applications fell by 1.4%. These figures highlight the challenges faced by both homebuyers and existing homeowners looking to refinance their mortgages.
The MBA’s weekly mortgage applications survey, which has been conducted since 1990, gathers data from mortgage bankers, commercial banks, and thrifts. The survey captures over 75% of all retail residential mortgage applications in the United States, making it a reliable indicator of market trends.
