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The Mortgage Bankers Association’s (MBA) latest Weekly Application shows a mild slowdown in purchase and refinancing activity from the previous week, on a seasonally adjusted basis. The Market Composite Index decreased by 8.7% and its constituent Purchasing and Refinancing indices decreased by 3.0% and 11.7%, respectively. The MBA’s 30-year fixed-rate mortgage rate remained unchanged from the previous week at the record low of 3.3%. Despite the dip on a weekly basis, purchase mortgage applications are 18% higher on a year over year basis.

The MBA cites the offsetting effects between the release of pent-up housing demand against the tight supply of housing as factors that may crimp future growth. Moreover, additional housing inventory is needed to give buyers more options. Of late, new home buyer preferences gravitated towards sales of homes not yet built, as the biggest sales jump was in this category, on a year-over-year basis. Combined with the presence of challenging housing inventory, it may explain why purchasing waned this week.

It should be noted that the purchasing share of mortgage activity increased from the previous week by almost 2%. The Purchasing Index’s mild decline in the current week reflects a relatively lower level with respect to 1990, as indicated in the above figure.