The average loan size for the purchase of a home fell from its all-time high as demand for mortgage applications fell for the second week in a row.
According to the Mortgage Bankers Association, the average purchase loan amount fell to $415,000 for the week ending July 8, from $460,000 in March.
The total volume of mortgage applications fell 1.7% on a seasonally adjusted basis last week compared to the previous week. The results for the week included an adjustment for observance of Independence Day.
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On a seasonally adjusted basis, mortgage applications for the purchase of a home were down 4% from the previous week. On an unadjusted basis, purchase requests fell 14% from the previous week and 18% from the same week a year ago.
“Purchase applications for conventional and government loans continue to be weaker due to the combination of much higher mortgage rates and the deteriorating economic outlook,” said Joel Kan, associate vice president of economic forecasting. and industries of the MBA, in a press release.
The average contractual interest rate for 30-year fixed rate mortgages with conforming loan balances ($647,200 or less) remained at 5.74%. Meanwhile, the average contractual interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) decreased from 5.28% to 5.25%.
Home loan refinance applications were up 2% from the previous week, but down 80% from the same week a year ago. The refinancing share of mortgage activity rose to 30.8% of total applications from 29.6% the previous week.
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The latest data on mortgage applications comes as consumers continue to feel the pain of inflation.
On Wednesday, the Department of Labor reported that the consumer price index – a broad measure of the price of everyday goods, including gas, groceries and rents – climbed 9.1% in June compared to a year ago, the the fastest rate of inflation since December 1981. Prices jumped 1.3% in the one-month period from May.
Those numbers were both well above the headline figure of 8.8% and the 1% monthly gain predicted by economists at Refinitiv.
In June, the Federal Reserve raised its benchmark interest rate by 75 basis points for the first time in nearly three decades in a bid to rein in searing inflation. Policymakers have confirmed that a similar sized increase is on the table in July.