Mortgage Apps: Further Drop Even As Mortgages Retreat Slightly

Bottom Line: Mortgage applications hit another new low last week, despite a retreat in mortgage rates back below 7.50%. Averaging 7.41%, adjusted for points-paid, the 30-year fixed-rate mortgage was still 54 basis points above its one-year average, hampering affordability. The purchase index hit a new low, while refinancing remained off the lows but still depressed. Overall, application volumes continue to suggest that mortgage rates are jeopardizing the recovery in housing activity.

The MBA Mortgage Application Index FELL -4.2% to 185.0, BELOW the 13-week average of 202.0 and -31.6% BELOW the year-ago level. Non-seasonally adjusted the index FELL -5.6%. The Purchase Index FELL -5.0% to 142.0, BELOW the 13-week average of 158.0 and -30.0% BELOW the year-ago level. The Refinancing Index FELL -2.8% to 397.0, BELOW the 13-week average of 423.0 and -34.9% BELOW the year-ago level. The effective (adjusted for points paid) 30-year mortgage rate ROSE 18bps to 7.54%, ABOVE the 13-week average of 7.13% and 29bps ABOVE the year-ago level. Current coupon yields in the secondary market were up 16.0 bps last week , closing at 6.14%, and were up 9.0 bps this week through Tuesday.