Mortgage applications decreased 1.2% from one week earlier, according to this week’s Mortgage Applications Survey from the Mortgage Bankers Association (MBA). The drop marks a second week of declines after several consecutive gains in the 2% range, indicating that rising rates, economic uncertainty and continued low inventory may be putting a longer-term damper on both refinancing and new mortgages.
- The Market Composite Index decreased 1.2% on a seasonally adjusted basis from one week earlier.
- On an unadjusted basis, the Index decreased 2% compared with the previous week.
- The Refinance Index decreased 4% from the previous week and was 75% lower than the same week one year ago.
- The seasonally adjusted Purchase Index increased 0.2% from one week earlier.
- The unadjusted Purchase Index decreased 1% compared with the previous week and was 16% lower than the same week one year ago.
- The refinance share of mortgage activity decreased to 32.3% of total applications from 33.0% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 9.4% of total applications.
- The FHA share of total applications increased to 11.3% from 11.1% the week prior. The VA share of total applications decreased to 10.4% from 10.5% the week prior. The USDA share of total applications remained unchanged at 0.5% from the week prior.
- The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.46% from 5.49%, with points decreasing to 0.60 from 0.74 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) decreased to 5.02% from 5.03%, with points decreasing to 0.41 from 0.61 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 5.36% from 5.32%, with points increasing to 0.82 from 0.71 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
- The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.72% from 4.73%, with points decreasing to 0.70 from 0.82 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
- The average contract interest rate for 5/1 ARMs increased to 4.49% from 4.42%, with points increasing to 0.76 from 0.73 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The takeaway:
“The 30-year fixed rate declined for the second straight week to 5.46 percent but remains well above what borrowers were used to over the past two years. Most refinance borrowers continue to remain on the sidelines as a result, and refinance applications have fallen in nine of the past 10 weeks. Compared to January 2022, refinance activity is down 66 percent,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting. “Higher mortgage rates are also impacting purchase market conditions, as the purchase index remained close to lows last seen in the spring of 2020 when a significant portion of activity was put on hold due to the onset of the pandemic. Currently, higher rates, low inventory, and high prices are keeping prospective buyers out of the market.”
