It is fast becoming a tale of two mortgage markets, as interest rates move sideways and refinances dry up.
Total mortgage application volume increased 0.2 percent last week on a seasonally adjusted basis, according to the Mortgage Bankers Association. Volume is 20 percent higher than the same week one year ago.
There is now a growing divide, however, between refinance applications and those needed to purchase a home. Refinances fell 2 percent for the week, seasonally adjusted, but are still 13 percent higher than a year ago. Purchase applications rose 4 percent to the highest level since January and are 30 percent higher than last year.
“Mortgage markets continued to retrench last week,” said Lynn Fisher, the MBA’s vice president of research and economics. “Declining refinance activity was accompanied by falling average loan sizes for refinance applications, which have decreased for the third consecutive week after reaching their survey peak.”
That is because small interest rate moves affect larger loans more. Smaller loans tend not to benefit from small rate moves, as the fees to refinance outweigh the savings.