While the housing market typically heats up during this time of year, last week's mortgage application volume has shown otherwise. The Mortgage Bankers Association released its weekly Market Composite Index which shows that loan applications declined 4.1 percent when seasonally adjusted. This is the largest single week decline since the week ended April 22.
The slowdown in purchase applications was revealed despite strong buyer demand. Nonetheless, last weeks figures are still 42 percent higher than the same period last year.
Both purchase and refinances fell, as well as applications for various government loans.
MBA Chief Economist Mike Fratantoni attributed the drop to "market expectations for a June Fed [rate] hike increasing recently." The Fed has yet to announce definitively if it will raise short-term interest rates again this summer. The Fed short-term rates do not have a direct impact on fixed mortgage rates but rather on adjustable rate mortgages.
Meanwhile, conforming no-point 30-year fixed mortgage rates average 3.625 percent while the 15-year rate is near 2.875 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.