The applications for home mortgages declined last week as refinance has dropped to its lowest level since February 2020 with fewer homeowners able to take advantage of lower rates during a holiday-shortened week.
On Wednesday, the Mortgage Bankers Association said its seasonally adjusted market index fell 3.1% in the week ending June 4 from a week earlier. This revealed a decline in applications for refinance of 5.1% and was 27% lower than the same week one year ago.
The buying index increased from a week earlier 0.3%. The week's statistics included an adjustment for the Memorial Day holiday.
Home price growth continues to accelerate, driven by favorable demographics, the recovering job market and economy and housing demand exceed supply, said Joel Kan, an economist at the MBA in a statement.
Surging home prices and limited supply have recently reduced home sales, and a record-low percentage of U.S. consumers think now is a good time to buy a home.
The average contract interest rate for traditional 30-year mortgages decreased from 3.17% the week before to 3.15% last week.