Mortgage rates are hovering at a six-month low, yet mortgage demand is decreasing. And high-end buyers are taking the lion's share of the blame.
Total mortgage application activity for refinancings and home purchases plunged 6.2 percent last week on a week-over-week seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday. The index is now 17 percent below where it was a year ago.
Broken out, home purchase applications dropped 4 percent last week. However, applications are still 8 percent higher than a year ago.
“We’re seeing indications that entry-level buyers continue to come into the market as jumbo borrowers looking at bigger homes step back,” says Mike Fratantoni, the MBA’s chief economist. “Last week, the average loan size for home purchase dropped to its lowest level since January.”
Applications for mortgage refinancing dropped 9 percent for the week. Applications are down 35 percent compared to a year ago.
The average 30-year fixed-rate mortgage was 4.13 percent last week, unchanged from the previous week’s average, the MBA reported.
Source: “Mortgage Applications Drop 6% as Wealthy Buyers ‘Step Back,’” CNBC (June 28, 2017)
