Mortgage Purchase Applications Fall, Refinancing Ticks Up

Despite lower financing rates, purchase applications for home mortgages fell a seasonally adjusted 5 percent in the February 1 week, the third consecutive weekly decline after surging at the start of the year. Purchase applications were 2 percent lower on an unadjusted basis than in the same week a year ago, narrowing last week's year-on-year decline by 5 percentage points. Application for refinancing rose 0.3 percent during the week, with the refinance share of mortgage activity falling 0.4 percentage points to 41.6 percent. The average interest rate on 30-year fixed rate conforming mortgages ($484,350 or less) fell 7 basis points to 4.69 percent, the lowest rate since April 2018. The cooling seen in the last 3 weeks shows buyers more resistant to lower financing costs than at the start of the year and may point to less strength for the housing market's upcoming spring selling season than initially indicated. Note that results for the prior week included an adjustment for the Martin Luther King Jr. holiday.