“Mortgage rates were volatile last week, as investors tried to gauge upcoming moves by the Federal Reserve amid several divergent signals, including rising inflation, mixed job market data, strong consumer spending, and a supply-constrained housing market that has led to rapid home-price growth,” Fratantoni said. “Purchase applications for conventional loans declined last week to the lowest level since last May. The average loan size for total purchase applications increased, indicating that first-time homebuyers, who typically get smaller loans, are likely getting squeezed out of the market due to the lack of entry-level homes for sale.”
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The adjustable-rate mortgage (ARM) share of activity dipped 3.6% of total applications, while the FHA held steady at 9.5%. The VA share of total applications decreased seven basis points to 10.5%, and the USDA share of total applications remained unchanged at 0.5% the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.20% from 3.18%, while the contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased to 3.23% from 3.26%.