Mortgage applications fell for the fourth consecutive week as the 30-year fixed-rate mortgage rose to its highest level since 2001, reaching 7.16%. For the week that ended August 11, mortgage applications fell 0.8% from the prior week, according to data from the Mortgage Bankers Association.
Last week, treasury yields and mortgage rates remained elevated following the release of a strong CPI report in July. As the next Fed meeting approaches, investors worry about another rate hike.
“Overall applications decreased because of these higher rates, as both purchase and refinance applications ended the week at their lowest levels since February 2023,” said Joel Kan, MBA’s vice president and deputy chief economist.
However, government purchase applications jumped 2.4% over the week. Increases in both FHA and VA purchase categories drove the application numbers up. Meanwhile, the ARM share of applications also rose slightly to 7%, the highest level since April 2023. This surge in ARM applications comes as borrowers look for relief from higher fixed rates, said Kan.
Meanwhile, the refinance index decreased 2% since last week and is 35% lower than it was the same week a year ago. The unadjusted purchase index decreased 2% compared with the previous week and was 26% lower than the same week one year ago.
The Federal Housing Administration loans’ share increased to 13.8% from 13.6% the week prior. The U.S. Department of Veteran Affairs and the U.S. Department of Agriculture loans’ share remained unchanged at 11.8% and 0.4%, respectively.
The average contract interest rate for 5/1 ARMs fell to 6.20% from 6.36% a week prior.