The number of U.S. borrowers seeking a home loan fell to a one-month low amid concerns about the growing trade tension between China and the United States and its impact on the economy, the Mortgage Bankers Association said on Wednesday.
The Washington-based group’s seasonally adjusted measure on mortgage applications for home purchase and refinancing declined by 3.3% to 411.5 in the week ended May 24. This was the lowest level since the week of April 26.
"Concerns over European economic growth and ongoing uncertainty about a trade war with China were some of the main factors that kept mortgage rates low last week. Even with lower rates on three of the five surveyed loan types, refinance activity fell 6 percent, essentially reversing an 8 percent increase the week before," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.
"Purchase applications decreased for the third straight week, but remained more than 7 percent higher than a year ago. It is possible that the trade dispute is causing potential homeowners to hold off on buying, with the fear that further escalation - or the lack of resolution - may have adverse impacts on the economy and housing market."
The refinance share of mortgage activity decreased to 39.7 percent of total applications from 40.5 percent the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) remained unchanged from 4.33 percent. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.73 percent from 3.78 percent.
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