Mortgage applications down slightly as some consumers wait for another rate drop

by Kerrie Kennedy

Mortgage applications were down slightly for the week ending Sept. 11, decreasing 2.5% from one week earlier, according to the latest Mortgage Banker Association’s Weekly Mortgage Applications Survey.

On an unadjusted basis, the Market Composite Index — which measures mortgage loan application volume – was down 13% compared with the previous week, while the Refinance Index decreased 4% from the previous week. Still, year over year, mortgage activity is up. The Refinance Index was 30% higher than the same week a year ago and the unadjusted Purchase Index was 4% higher than the same week a year ago.

“Mortgage rates held steady last week, and the 30-year fixed rate — at 3.07% — has now stayed near the 3% mark for the last two months,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting in a press release. “With the flurry of refinance activity report over the past several months, demand may be slowing as remaining borrowers in the market potentially wait for another sizable drop in rates.”

Meanwhile, this afternoon, all 17 Federal Reserve officials announced they plan to keep interest rates near zero through 2021, with 13 of them projecting those rates to remain in place through 2023.

Forecasting unemployment levels between 7% and 8% during Q4, the Federal Open Market Committee said in a statement that it “expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.”

While applications to buy homes were down in the latest MBA report, purchase activity is still strong, Kan added.

“Purchase activity has outpaced year-ago levels for 17 consecutive weeks, with a stronger growth in loans with higher balances pushing MBA’s average loan size to a new survey high of $370,200.”