Mortgage Apps: Further Declines as Purchase Trend Dives

Bottom Line:  Mortgage applications fell last week as applications for purchases fell, even after adjusting for the holiday-shortened week, resuming a downtrend after several weeks of a modest rebound. Current coupon yields jumped last week, but primary mortgage rates, which hadn't declined as much as the secondary market, were steady with the average 30-year fixed-rate at just under 6% (adjusted for points). Overall, the trend in mortgage applications suggests that the slowdown in housing has continued through mid-July. There now appears to be a risk that purchase application volume will fall below the levels seen from 2017-19 following changes in the tax code that limited mortgage interest deduction.

The MBA Mortgage Application Index FELL -1.7% to 300.0, BELOW the 13-week average of 324.0 and -58.8% BELOW the year-ago level. Non-seasonally adjusted the index FELL -12.7%.
 
The Purchase Index FELL -3.6% to 224.0, BELOW the 13-week average of 234.0 and -17.9% BELOW the year-ago level.
 
The Refinancing Index ROSE 2.2% to 685.0, BELOW the 13-week average of 801.0 and -79.6% BELOW the year-ago level.
 
The effective (adjusted for points paid) 30-year mortgage rate was nearly unchanged, DOWN -1bps to 5.91%, ABOVE the 13-week average of 5.73% and 85bps ABOVE the year-ago level. Current coupon yields in the secondary market were up 26.0 bps last week , closing at 4.51%, and were down -8.0 bps this week through Tuesday.