Mortgage applications dropped for the third straight week, despite a decline in interest rates demonstrating a slowdown in home lending led chiefly by a drop in refinancing, according to the Mortgage Bankers Association. The decline in interest rates saw the contract rate on a 30-year fixed rate mortgage decrease to 4.55% from a higher 4.69% a week earlier.
The market composite index, a measure of loan application volume dropped 5.1% on a seasonally adjusted basis with an adjustment for the Independence Day Holiday. Purchases showed a slim 2.6% drop, while refinancing decreased a steeper 6.2% from a week ago.
Activity in the refinancing market seems to be waning as fewer homeowners shop to refinance mortgages. Refinances are 42.1% lower than a year ago, according to the bankers’ survey, which accounts for about half of all home loan applications. The refinancing index dropped the last four straight weeks.
Refinancing mortgages have been on an up and down cycle for more than a year as the Fed keeps its primary lending rate on money leant to banks at 0.25% in an effort to get banks and mortgage companies to lend to home mortgage borrowers. However, concerns about the U.S. economy, financial markets and the direction of housing prices are sending jitters across the country slowing home lending and housing sales in most regions.
The refinance share of applications also declined to 65.6% of application volume from 66.4% the prior week, while adjustable rates made up only 5.5% of loan activity. The average rate on a fully executed mortgage with a 15-year fixed rate loan dropped to 3.68% from 3.79% with points to 1.10 from 0.88 a week earlier.