As mortgage rates continue to fluctuate, so too do mortgage applications, decreasing 8.8% this week from one week earlier when we saw a slight increase in applications. This is according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association’s (MBA) for the week ending April 14, 2023.
This week’s numbers:
- The Market Composite Index, a measure of mortgage loan application volume, decreased 8.8% on a seasonally adjusted basis from one week earlier.
- On an unadjusted basis, the Index decreased 8% compared with the previous week.
- The Refinance Index decreased 6% from the previous week and was 56% lower than the same week one year ago.
- The seasonally adjusted Purchase Index decreased 10% from one week earlier.
- The unadjusted Purchase Index decreased 9% compared with the previous week and was 36% lower than the same week one year ago.
- The refinance share of mortgage activity increased to 27.6% of total applications from 27.0% the previous week.
- The adjustable-rate mortgage (ARM) share of activity increased to 6.3% of total applications.
- The FHA share of total applications increased to 12.7% from 12.3% the week prior.
- The VA share of total applications decreased to 11.7% from 12.8% 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 ($726,200 or less) increased to 6.43% from 6.30%, with points increasing to 0.63 from 0.55 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) increased to 6.28% from 6.26%, with points increasing to 0.51 from 0.42 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.33% from 6.29%, with points increasing to 0.94 from 0.91 (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 increased to 5.89% from 5.78%, with points increasing to 0.65 from 0.57 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
- The average contract interest rate for 5/1 ARMs increased to 5.56% from 5.51%, with points decreasing to 0.72 from 0.90 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
MBA’s take:
“Last week’s increase in mortgage rates prompted a pullback in application activity. With more first-time homebuyers in the market, we continue to see increased sensitivity to rate changes. The 30-year fixed rate increased 13 basis points to 6.43%, which led to purchase applications declining 10%,” said Joel Kan, MBA’s vice president and deputy chief economist. “Affordability challenges persist and there is limited for-sale inventory in many markets across the country, so buyers remain selective on when they act. The 10-percent drop in FHA purchase applications, and the increase in the average purchase loan size to its highest level in a month, are other indications that first-time buyers have pulled back. The spread between the jumbo and conforming 30-year fixed rates widened slightly last week to 15 basis points, but this was a much tighter spread compared to the past year. As banks reduce their willingness to hold jumbo loans, we expect this narrowing trend to continue.”
Added Kan, “Refinances also declined and accounted for just over a quarter of all applications, as rates remained more than a full%age point above the same week a year ago. This leaves very little refinance incentive for most homeowners.”
