Applications for new mortgages fell last week by a seasonally adjusted -2.1% from the previous week, including an adjustment for the Fourth of July holiday. Unadjusted, the total fell by -22%. A drop of -3% in the adjusted refinancing applications was responsible for the overall drop as new applications rose by 3%. Refinancing applications accounted for 77% of all applications in the week.
The data comes from the weekly survey conducted by the Mortgage Bankers Association.
For the whole US, the average loan size for a home purchase fells from $243,733 in May to $240,897 in June, and the average loan size for a refinance fell from $226,576 in May to $218,619 in June.
The average contract interest rate for a 30-year conforming loan fell to 3.79%, the lowest rate in the survey’s history. FHA-backed 30-year conforming loan rates fell to 3.63%, again the lowest since the survey was first conducted in 1990.
The average contract rate for a 15-year conforming loan fell to 3.15%, another record low, and the contract rate on a 30-year jumbo loan dropped to 4.05%, again a record. The 5/1 adjustable rate mortgage rate fell to a record low of 2.71%.
The record low mortgage rates should be contributing to more activity, not less. There has been an improvement in home sales, but lenders remain cautious on new loans, requiring very high credit scores from potential borrowers. Until credit conditions ease somewhat, new purchases, and even refinancings, could continue to grow only slowly if at all.