T
he mortgage application sector revealed an unusual behavior towards the end of April after it recorded a decline in mortgage application volume. This happened despite the increasing housing market activities amid the pandemic. Could mortgage applications be struggling to keep up with the hot housing market? What could be behind this? According to MBA, its Market Composite Index— a measure of mortgage loan application volume— decreased 0.9% on a seasonally adjusted basis during the week ended April 30. The index was 1% lower than the previous week on an unadjusted basis. Additionally, the refinance share of mortgage activity surged 60 61% of total applications from 60.6% the previous week. On the other hand, the seasonally adjusted Purchase Index dropped 3% and was down 2% on an unadjusted basis. Moreover, purchase activity was still up 24% compared to the same week in 2020. What does this mean? According to Joel Kan, MBA’s Associate Vice President of Economic and
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Industry Forecasting, both conventional and government purchase applications declined, but average loan sizes increased for each loan type.
“This is a sign that the competitive purchase market, driven by low housing inventory and high demand, is pushing prices higher and weighing down on activity. The higher prices are also affecting the mix of activity, with stronger growth in purchase loans with larger-than-average balances,” Kan said.
Mortgage Application Volume fails to keep up with the Red Hot Housing Market
The Power Is Now Magazine | JUNE 2021
