Refinance Applications Dive

On the heels of a record quarter of home price declines, total mortgage applications sit 28.5% above the same week last year, even as the weekly momentum of refinance applications slips, according to a weekly survey released Wednesday by the Mortgage Bankers Association (MBA). The volume of mortgage loan applications submitted in the week ending May 22 showed a week-over-week loss of 14.2%. Applications for refinance mortgages alone fell 18.9%, while applications for purchase loans inched up 1% from a week earlier. Refinance applications accounted for 69.3% of total applications this week, down from 73.6% in the previous week, the MBA found. A separate survey that adjusts raw data to count multiple applications from a single household as one entry — effectively breaking down total mortgage application activity to the total volume of households applying for mortgages — saw the rate of decline in activity double since last week. This Mortgage Application Index — or MAX — fell 2.4% in the week ending May 22, indicating household activity in the application process declined in tandem with overall application activity as found by the MBA’s results. The MAX publisher Paul Descloux, in his weekly commentary on the index, attributes this to a possible balancing out of demand. Efforts from the central bank to force mortgage rates down sparked a substantial interest in mortgage loans and especially refinance, but now that the shine has worn off, the market might begin to see more realistic levels of mortgage application interest, Descloux says. “Organic home sales are near their seasonal peak while refinancings have reached equilibrium with the current rate structure,” he writes. “Given the resources already deployed and the reality of financing USA debt, mortgage rates are unlikely to move lower.” Write to Diana Golobay.