Applications for home loans fell again as mortgage rates and average loan size continued to grow.
An index tracking applications to purchase homes dropped 6 percent, seasonally adjusted, last week compared to the week prior, according to the Mortgage Bankers Association. The MBA metric, known as the purchase index, had sunk 5 percent the previous week.
Joel Kan, MBA’s head of industry forecasting, attributed the decline to rising mortgage rates. The rate for a 30-year, fixed-rate mortgage was 2.98 percent, a 2 basis point increase from the week before. Jumbo rates were unchanged at 3.11 percent.
“Expectations of faster economic growth and inflation continue to push Treasury yields and mortgage rates higher,” said Kan in a statement. Last week’s rates were the highest since November, according to the MBA.
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MBA’s index tracking applications to refinance also decreased 5 percent last week compared to the week prior.
But Kan maintained both the purchase and refinance markets were still strong overall, noting that the unadjusted volume of purchase applications was up 15 percent year over year while the volume of refinance applications were up 51 percent year over year.
The housing market at large continues to see strong demand and historically low inventory, which is driving up housing prices.
Following that larger trend, the average size of purchase loan tracked by MBA increased to $412,200, another record. The prior week the average size was $402,200.