Mortgage activity continues to fall

Mortgage activity continues to fall

The mortgage market has kept a number of potential homebuyers on the sidelines.

Mortgage rates have risen for a couple of weeks in a row, due to moves in the bond market caused by the Federal Reserve hiking interest rates, but have fallen again in the past week.

Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Banker's Association said the purchase market continues to experience a slowdown despite the strong job market. In five of the last six weeks, activity has fallen as buyers remain on the sidelines due to still challenging affordability conditions and doubts about the strength of the economy. The seasonally adjusted Purchase Index decreased by 1% from a week ago.

Demand for mortgage applications went up 0.2% from a week ago, according to the weekly survey from the MBA.

The Refinance Index increased by 4% from the previous week.

Kan said that refinance applications increased over three percent but remained more than 80% lower than a year ago in this higher rate environment.

The July jobs report could force the Federal Reserve to raise interest rates at the fastest pace since 1994, as it tries to crush inflation and cool the labor market.

The Labor Department said last week that the U.S. employers added 528,000 jobs in July, a surprisingly strong gain that defied fears of a slowdown in labor markets.

The survey covers over 75% of U.S. retail residential mortgage applications and has been conducted weekly since 1990.