A measure of US mortgage applications for home purchases slid last week to the lowest level since February, indicating elevated housing prices are impeding a nascent upswing in demand from falling mortgage rates.
The Mortgage Bankers Association’s index of mortgage applications to buy a home decreased 5.2% to 130.6 in the week ended Aug. 16. Refinancing applications also tumbled after surging to a two-year high in the prior week.
The contract rate on a 30-year fixed mortgage eased another 4 basis points to 6.5%, still the lowest since May of last year, the MBA data showed Wednesday. The rate on a 15-year fixed mortgage rose, and the average five-year adjustable mortgage jumped by the most since the start of the year.
Mortgage rates track US government securities, and the yield on the 10-year Treasury note has dropped recently on expectations that the Federal Reserve will start lowering its benchmark interest rate next month. Policymakers including Chair Jerome Powell will speak at the central bank’s annual symposium in Jackson Hole, Wyoming later this week.
Despite more favorable mortgage rates amid prospects of easier Fed monetary policy, high home prices have pushed housing affordability down to around the lowest level in decades.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
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