Mortgage applications gave back their gains last week, falling exactly as much as they had risen the previous week. This as interest rates increased ever so slightly.
Total application volume fell 2.3 percent on a seasonally adjusted basis for the week ending April 24th, but is up nearly 34 percent from a year ago, according to the Mortgage Bankers Association (MBA). Applications to refinance home loans fell four percent, while those to purchase a home were unchanged for the week.
"Applications for conventional purchase loans are at their highest level since August 2014," said Mike Fratantoni, chief economist for the MBA. "With the recent pickup in existing home sales, this is another sign that housing markets are strengthening."
Still, the stall in purchase application volume is a red flag, given that they had been on a tear, up 13 percent in the past four weeks. It could be a one-week aberration, but it is somewhat unexpected right in the heart of the spring season, traditionally the busiest for home sales. Home price gains have been increasing, as strong buyer demand comes up against very tight supply. That may be playing into the drop in applications—simply that people are not finding the right homes at the right price
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.85 percent from 3.83 percent, with points increasing to 0.35 from 0.32 (including the origination fee) for 80 percent loan-to-value ratio loans, on the MBA survey.
While mortgage rates have hovered below the four percent mark far longer than most analysts expected, they did rise to their highest levels in a month Tuesday, just ahead of new first quarter gross domestic product data expected Wednesday morning and a Federal Reserve meeting statement scheduled for the afternoon.
"Tomorrow's data and events really can take rates quickly in either direction," noted Matthew Graham of Mortgage News Daily.
In addition, the National Association of Realtors will release its monthly pending home sales index for March Wednesday morning, a read on how many contracts homebuyers signed to purchase homes during the month. That report comes out at 10 a.m. ET.