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Homebuyer demand for purchase mortgages waned last week as mortgage rates plateaued near 2023 highs set earlier this month, according to a weekly survey of lenders by the Mortgage Bankers Association (MBA).

The MBA’s Weekly Mortgage Applications Survey showed requests for purchase loans were down by a seasonally adjusted 3 percent last week compared to the week before, and 23 percent from a year ago. Applications to refinance were down 0.4 percent week over week and 30 percent from a year ago.

The decline in purchase loan applications, which was driven in part by a 10 percent drop in FHA loan requests, brought purchase loan demand to the lowest level in more than a month, MBA Deputy Chief Economist Joel Kan said in a statement.

Joel Kan

“Mortgage rates were essentially flat last week but remained high, with the 30-year fixed rate staying at 6.87 percent and contributing to a pullback in mortgage applications,” Kan said. “Many borrowers remain on the sidelines given current rates and persistent affordability challenges.”

The decrease in applications for FHA loans, which are popular with first-time homebuyers, helped push the average purchase loan size up to $432,700, its highest level since the end of May.

Mortgage rates near 2023 peaks

Black Knight’s Optimal Blue Mortgage Market Indices, which track daily rate lock data, show rates on 30-year fixed-rate conforming mortgages averaging 6.87 percent Tuesday, down from a 2023 high of 7.02 percent on July 7.

For the week ending July 21, the MBA reported average rates for the following types of loans:

  • For 30-year fixed-rate conforming mortgages (loan balances of $726,200 or less), rates averaged 6.87 percent, unchanged from the week before. But with points decreasing to 0.65 from 0.66 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, the effective rate decreased slightly.
  • Rates for 30-year fixed-rate jumbo mortgages (loan balances greater than $726,200) averaged 6.90 percent, up from 6.89 percent the week before. With points remaining at 0.64 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
  • For 30-year fixed-rate FHA mortgages, rates averaged 6.80 percent, up from 6.77 percent the week before. With points decreasing to 1.03 from 1.12 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
  • Rates for 15-year fixed-rate mortgages, popular with homeowners who are refinancing, averaged 6.37 percent, up from 6.36 percent the week before. With points increasing to 0.75 from 0.72 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
  • For 5/1 adjustable-rate mortgages (ARMs), rates averaged 6.01 percent, down from 6.27 percent the week before. With points increasing to 1.25 from 0.91 (including the origination fee) for 80 percent LTV loans, the effective rate also decreased.

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Email Matt Carter

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