The MBA's Market Composite Index, a measure of loan application activity based on surveys of the association's members, crept up a seasonally adjusted 0.8% for the week ending June 21. One week earlier, the index rose by a similar 0.9%, but compared to the same seven-day period of 2023, volumes finished 1.8% lower. Data was adjusted to account for the Juneteenth holiday. 

The recent drop in mortgage rates helped draw in aspiring buyers, according to Joel Kan, MBA vice president and deputy chief economist. 

The conforming 30-year fixed-rate average came in at 6.93%, edging down from 6.94% a week earlier. Meanwhile, borrower points used to help buy down the rate were unchanged at 0.61 for 80% loan-to-value ratio applications.  

Both conventional and government-backed purchase loans increased. The seasonally adjusted Purchase Index climbed up 1.2%, with applications coming through Federal Housing Administration or Department of Veterans Affairs borrowing programs both seeing weekly growth above 2%. 

"Home buyers in those segments sought to take advantage of the recent rate relief," Kan said in a press release. But total purchase-loan activity still came in 13.2% slower than the pace from one year earlier. 

In spite of recent gains, consumers are still encountering elevated home prices with minimal turnover in the housing market, the S&P CoreLogic Case-Shiller price index showed this week. Homeowners holding on to interest rates below current levels remain hesitant to relocate, helping keep housing costs high, even as the past several weeks have shown inventory slowly increasing.  

At the same time, the MBA's Refinance Index saw minimal movement, posting an 0.1% decrease from one week prior. A pullback in federally sponsored refinance loans, in particular, accounted for flattening levels.

"Lower rates, however, were still not enough to entice refinance borrowers back, as most continue to hold mortgages with considerably lower rates," Kan noted. 

But despite sluggish activity for the week, refinances still ended up 25.8% higher from a year ago. The share of refinances relative to total applications also shrank to 35.1% from 35.2% seven days earlier. 

The slide in refinance volume also drove the Government Index downward by a seasonally adjusted 2%, offsetting the growth in purchases. The federally guaranteed share of home loans, likewise, diminished. 

The portion of VA-sponsored applications decreased by a full percentage point to 13.8% from 14.8% of total volume week over week. But FHA-guaranteed mortgage volume managed to grow to 13.1% from 12.7% in the previous survey period. At the same time, loans guaranteed by the U.S. Department of Agriculture accounted for the same 0.4%.