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Mortgage refis are slowing. Here’s why
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Mortgage applications ticked up 0.2% on a seasonally adjusted basis from a week earlier, but economists have pointed to slowing refinance activity as rates move higher and borrowers see less of an incentive.
"The 30-year fixed rate reached 3.18 percent last week and has risen 15 basis points over the past month, resulting in an 11 percent drop in refinance applications during this time. Government refinance applications fell over 3 percent last week, driven by a decline in FHA refinances and an 8-basis-point increase in the average FHA mortgage rate," Joel Kan, MBA’s associate vice president of economic and industry forecasting, said.
The Market Composite Index, which compiles all activity, increased 0.4% compared with the previous week.
MORTGAGE APPLICATIONS SHOW RESURGENCE NOT SEEN SINCE APRIL
"Mortgage rates reached their highest level since June 2021, but application activity changed little this week," he added. "An increase in home purchase applications offset a slight decline in refinances. The increase in purchase applications was welcome news, but was primarily driven by a 2 percent gain in conventional purchase applications, which kept the average loan size elevated."
In addition, the MBA reported, the refinance share of mortgage activity decreased to 63.9% of total applications from 64.5% the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 3.4% of total applications.